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Is strong trade data too good to be true?

By Cheng Jing (Xinhua)

08:41, April 12, 2013

BEIJING, April 11 (Xinhua) -- Rather than offering the reassurance of a firming economy, China's stronger-than-expected trade growth in the first quarter has stirred doubt about data accuracy.

China's foreign trade -- exports and imports combined -- increased 13.4 percent year on year to 974.67 billion U.S. dollars in the first three months, faster than the government's 8-percent goal set for the entire year, the General Administration of Customs (GAC) revealed Wednesday.

The rise also marked a significant jump from the 6.2-percent growth seen in 2012, when the Chinese economy marked its slowest growth in 13 years, growing by 7.8 percent.

Though the economy has shown signs of a gentle recovery since late last year, Wednesday's robust trade data came as a surprise to market watchers, who delved further into the breakdowns and found an unusual surge in the mainland's exports to Hong Kong in March, which were reportedly up 93 percent year on year.

Although the trade data calculated by the two sides has seldom moved in tandem, the sharp rise in March commanded market attention, with some suspecting the dramatic rise as evidence of disguised hot money inflows through trade channels amid the backdrop of a rising yuan.

Official statistics show that China's central bank and commercial banks purchased 295.4 billion yuan (47.2 billion U.S. dollars) in foreign exchange in February, the third straight month of increases, indicating increasing capital inflows to the country during the period.

This set of data prompted concerns about whether the export volume in the first quarter had been magnified, as companies may have misreported their exports to obtain tax rebates or to bypass the country's capital controls to move money into the mainland.

In response to such doubts, Zheng Yuesheng, spokesman for the GAC, said the agency has conducted initial research into the reported phenomena and will coordinate with related departments to further probe the reasons behind the substantial growth.

"We'll take corresponding regulatory measures, if necessary," Zheng added.

In stark contrast to the spokesman's readiness to admit the possibility of certain distortions in the trade data, accusations that the Chinese government tried to manipulate the data to make it "look good" landed far out of bounds.

Even if the trade data was somewhat inaccurate, it was still reliable and came largely in line with other data that point to strengthening economic recovery.

China's official manufacturing purchasing managers' index (PMI) released by the National Bureau of Statistics (NBS) rose to an 11-month high of 50.9 in March. A separate survey by HSBC showed that the final PMI climbed to 51.6 -- all suggesting solidifying strength.

Despite the many imperfections in its statistical methodology, China has never ceased its efforts to improve in this regard, as policymakers rely heavily on the key economic indicators to adjust macro-controls in the large and complicated economy.

Last year, the NBS moved to build back-up repositories for deep data analysis and processing, allowing enterprises to directly report their data to the NBS.

As Ma Jiantang, the head of the NBS, has said, the primary political task of statisticians is to improve the authenticity and accuracy of economic data to provide solid support for decision-makers.

China is due to release key economic data for the first quarter next week.

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