BEIJING - China's crackdown on fake export invoices used to disguise money flows is probably cutting the nations trade figures, revealing subdued global demand that will weigh on economic growth.
Outbound shipments may have grown 7.1% in May from a year earlier, less than half the previous month's reported 14.7%, based on the median estimate of 34 economists ahead of data due June 8. Import growth probably slowed to 6.9% from April's 16.8%, a Bloomberg News survey showed.
Successful deterrence of fraudulent data through regulatory scrutiny of companies and banks would help restore trust in trade figures, while more accurate numbers may also highlight the urgency for Premier Li Keqiang to shift growth toward domestic consumption. Weakness in exports could also test Li's reluctance to add stimulus to support the expansion of the worlds second-biggest economy.
The crackdown from Chinas foreign-exchange authorities on fake invoicing will bring the inflated export growth down to the real trend, which is single digits, said Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong, who projects export gains of 5% for May. More broadly, China's economy is weakening but is not collapsing, said Zhang, who previously worked at the International Monetary Fund.
Economists in a separate survey in May said January-April export growth was overstated by 4 to 13 percentage points. Shipments abroad probably rose 8.5% in the first four months of 2013 from a year earlier, based on the median estimate of 15 economists, less than half the official 17.4%. Imports may have gained 8.25%, according to 14 analysts median estimate, compared with the government's 10.6% figure.
Regulatory Efforts
Slower growth in last months official trade data may reflect measures announced by China's State Administration of Foreign Exchange to crack down on speculative funds entering the country disguised as payments for trade.
The currency regulator said May 6 that it will send out warning notices to companies whose goods and capital flows do not match as well as those bringing large amounts of cash into China. SAFE on May 22 told banks to improve checks of customer documents related to special trade zones amid speculation that the areas have been exploited to mask money inflows as exports.
Double-counting in the zones probably continued to inflate May's figures, said Steve Wang, chief China economist in Hong Kong for Reorient Financial Markets Ltd., an investment bank backed by the Chinese government. While exports probably rose 9.3% in May, the true rate may be close to 4.6% excluding distortions from double-counting in the zones, Wang said.