China’s General Administration of Customs reported that the country’s April exports rose 14.7% year-over-year, greatly beating market expectation of 9.2%. Imports in April also increased 16.8%, compared with market forecast of 13%.
The better-than-expected performance was led by a suspicious 57.2 percent jump in shipments to Hong Kong. Numerous banks released reports, voicing skepticism of the trade data.
Over-reporting is a possible distorting factor, says Goldman Sachs Gaohua in its report. But it expects this distortion to fall as China’s State Administration of Foreign Exchange (SAFE) tightens control over the issue.
Gaohua says that China’s underlying export momentum is in fact weak, if considering other indicators such as export orders index of the official Purchasing Managers Index and Korean exports. The bank expects an export recovery during the second half of the year led by a recovery in the U.S.
Nomura echoes such skepticism. It estimates that if excluding those disguised trade flows, April export growth is as low as 6.6% and import growth is only 9.3%.
ANZ (The Australia and New Zealand Banking Group) says that trade growth arising from round-tripping of goods between Shenzhen and Hong Kong contributed 34% of China’s export growth during the first quarter.
ANZ also notes that the growth in export values in Shenzhen beat that of the port throughput in volume by a large margin, suggesting over invoicing may have boosted China’s export data.