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Exports possibly inflated to meet growth targets, China media reports

Concerns that China's export figures are being exaggerated have resurfaced following the release of March 2013 numbers. Analysts cite the possibility of local governments padding overseas sales to meet trade growth targets as one of the reasons for the distortion.

Chinese business newspaper 21st Century Business Herald reports some cities are taking unconventional measures to boost trade data under pressure from higher branches of the government.

One such strategy, according to the publication, is the use of special customs supervisions areas where warehoused goods can be shipped to Hong Kong then returned to the warehouse the following day, with the local government shouldering freight costs. In the article, an anonymous source said some areas can complete $1.6 billion worth of imports and exports in 40 days via this method.

To quote from the article:

"Another foreign trade industry insider claimed the excessive growth can be attributed to some provincial and municipal governments' efforts to meet trade growth targets and achieve political performances. In a meeting held last April 2012, seven eastern provinces and cities pledged to try every means to secure 10 percent annual growth in foreign trade. Each province was required to set a growth target and tasks were then assigned to cities in the form of signed statements of target responsibility.

However, external demand was so grim last year, according to the business insider, that some cities resorted to unconventional measures to cope with pressure from higher-level government, including the use of special customs supervision areas to push up trade data."

In a Bloomberg article, HSBC Holdings Plc and Mizuho Securities Asia Ltd named the practice of moving products in and out of special trade zones within China to obtain tax rebates as "one day tours."

China YoY export value in March rose 10 percent, sedate compared with the 21.8 percent surge in February and more in line with on-the-ground realities. Growth in the previous three months outpaced projections by at least 7.5 percentage points.

Some economists, however, remain skeptical. They have posed several theories on how mainland China has sustained excessive growth despite challenges, while emphasizing there is limited supporting evidence.

The inconsistency in trade figures between the mainland and Hong Kong has been cited as possibly skewing export data.

The mainland's shipments to Hong Kong surged by nearly 93 percent to $48.4 billion, representing 27 percent of total exports. The SAR's figures for mainland imports, however, do not necessarily reflect this.

China customs spokesman Zheng Yuesheng said the discrepancy is a result of different "statistical methods" although he did acknowledge at a news briefing last week the possibility of export data being over-reported. Zheng added that the department is already conducting preliminary investigation into the matter. "We will certainly take action if needed."

Click here to read the complete article on Global Sources.

Note: This article "Exports possibly inflated to meet growth targets, China media reports" was originally published by Global Sources, a leading business-to-business media company and a primary facilitator of trade with China manufacturers and India suppliers, providing essential sourcing information to volume buyers through e-magazines and trade shows.

All price quotes in this report are in US dollars unless otherwise specified. FOB prices were provided by the companies interviewed only as reference prices at the time of interview and may have changed.

Disclaimer: All product images are provided by the companies interviewed and are for reference purposes only. Those product images featuring products with trademarks, brand names or logos are not intended for sale. We, our affiliates, and our affiliates' respective directors, officers, employees, representatives, agents or contractors, do not accept and will not have any responsibility or liability for product images (or any part thereof) which infringe on any intellectual property or other rights of a third party.

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