So Who Is Lying (More)?

Overnight China reported great trade data which saw exports and imports soar by more than 20% each compared to 2012. Of course, when one adjusts for January calendar effects the "rise" was virtually non-existent but that was too much work for the Shanghai Composite algos. A few hours later, the US did the same, reporting even better trade data which saw the trade deficit plunge the most in nearly three years. So far so good: we just have one question - who is lying more. Because unlike all other sole-sourced economic manipulated data which is solely a function of some excel goal seek model and various spreadsheets, bilateral trade has to foot. One country's net exports have to equal its countepart's net imports and vice versa.

Which is why we compiled the net trade data between the US and China, which was trumpeted earlier to have surpassed a $300 billion ($315 billion to be exact) deficit. At least as reported by the US side. The same "data", when reported from the perspective of China amounts to a surplus of some $219 billion, a difference of $96 billion!

The chart below shows the LTM net exports to the US from China's perspective (in blue) and the net imports from China from the US point of view (in red), with the black line the resulting net difference.

In other words, either China is massively underreporting its net exports to the US or the US is boosting its net imports figure.

Or, just as plausibly, both nations are simply pulling numbers out of thin air - numbers which have a massive impact on both nations' respective GDP prints, which is data that, at least in the Old Normal, used to matter.


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