The numbers donâ€™t match. In September, China exported $37.6 billion to Hong Kong, according to government data compiled by Bloomberg. For the same month, Hong Kongâ€™s governmentÂ says imports from the mainland amounted to only $24.1 billion. Thatâ€™sÂ this yearâ€™s biggest gap between Chinese and Hong Kong figures.
Where did all those billions of dollars go? Julian Evans-Pritchard, Capital Economicsâ€™ China economist, called the results â€œvery suspicious,â€ especially since the discrepancies are largely related to the trade of precious metals and stones. â€œIt seems the Chinese customs are basically overvaluing these gems [and] these precious metals,â€ he told Bloomberg Television on Tuesday. Meanwhile, â€œHong Kong customs are valuing them more accurately.â€
The China-Hong Kong discrepancy is just one example. Evans-Pritchard points to similar discrepancies regarding Chinese imports from South Korea. â€œWhat appears to be happening [is] we have some round-tripping,â€ he said.Â Companies may be claiming to import the stones from Korea at a certain price and then export them to Hong Kong at a higher price, pocketing the difference. That helps companies evade Chinese government currency controls at a time when thereâ€™s renewed pressure to strengthen the yuan. With such conditions, â€œit makes a lot of senseâ€ for Chinese companies to borrow money cheaply abroad and find ways to get that money into the country.
The Chinese government is not blind to the problem. ChinaÂ has found almost $10 billion in fraudulent trades nationwide since April of last year ,and companies have â€œfaked, forged, and illegally re-usedâ€ documents for exports and imports, Wu Ruilin, a deputy head of the State Administration of Foreign Exchangeâ€™s inspection department, told reporters in Beijing in September.
The faked invoices are additional reasons not to take at face value the economic statistics coming from China. â€œThis is definitely another important piece of evidence of over-invoicing exports to Hong Kong to facilitate money inflow into China,â€ Shen Jiangugan, chief economist at Mizuho Securities Asia, told Bloomberg News. â€œSo we shouldnâ€™t be too optimistic about recent export data from China.â€