Gaming the numbers is an international sport. And China's latest
export figures raise big questions about 1) the reliability of
reported figures, and 2) whether Chinese officials are juicing.
Chinese exports surged 14.1% in December and the report handedly
beat analysts' estimates.
"The 14.1% jump from a year earlier was the biggest positive
surprise since March 2011, according to data compiled by
Bloomberg. The increase didn't match goods movements through
ports and imports by trading partners according to UBS, while
Goldman Sachs and Mizuho Securities Asia Ltd. cited a divergence
from overseas orders in a manufacturing index.
'China's influence on the global economy has become bigger,
so not only Chinese policy makers but also business people and
the rest of the world need better data,' said Liu, Hong Kong-
based chief economist for Greater China, who formerly worked for
the World Bank. 'Unreliable data could have a negative impact on
resource allocation and business planning.'
The Beijing-based customs administration, which reported the
December trade figures on Jan. 10, said it couldn't immediately
respond to a faxed request from Bloomberg News for comment on the
Bloomberg's December survey of economists showed a median
forecast of just a 5% gain for Chinese exports compared to the
actual 14.1% gain reported.
After the Asian financial crisis in 1998, Chinese exports grew
only 0.5% and during the global financial crisis in 2008-09,
Chinese exports fell over 16%. China's total exports are dominated
by heavy machinery, infrastructure, and electronic parts while
textile, garments, and sneakers make just 15% of total exports.
With the eurozone (NYSEARCA:FXE) still on the edge of crisis and
U.S. economy decelerating, China's export sector faces another
uphill battle this year. Also, any escalation of China's ongoing
conflict with Japan (NYSEARCA:EWJ) may negatively impact its
commerce. It's never a good sign when the numberone and number
three economic juggernauts are at odds.
Thus far, Chinese equity ETFs have ignored accounting questions
by starting 2013 in positive territory.
The iShares FTSE China 25 Index Fund (NYSEARCA:FXI), Guggenheim
China Real Estate (NYSEARCA:TAO), and SPDR S&P China
(NYSEARCA:GXC) have all posted year-to-date gains between 2% to
Leveraged long funds like the Direxion Daily China Bull 3X
Shares (NYSEARCA:YINN) are up 25.55% over the past month.
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