China overtakes US to become world’s biggest trading nation -Despite fake data

China became the world’s biggest trader in goods for the first time last year, edging out the U.S. estimated 2013 total by about US$250 billion.

Thirty-five years after opening up, China was able to export US$2.21 trillion-worth of goods and import US$1.95 trillion-worth in 2013, said The Economist. Added together, its international trade in goods amounted to US$4.16 trillion.

The world’s second-largest economy raised its exports by 7.9 percent, while imports increased by 7.3 percent, with total trade up 7.6 percent from 2012, according to Zhen Yuesheng, chief statistician of the General Administration of Customs in Beijing, who released information on Friday.

Still, the milestone is not without its skeptics, as the accuracy of Chinese trade data and economic statistics over recent months has proven less than factual.

In the first quarter of 2013, China’s export growth unexpectedly accelerated even as shipments to the U.S. and Europe fell, spurring Bank of America Corp. and Mizuho Securities Co. analysts to say the figures were inflated by fake reports. The 14.7 percent increase, reported by the Customs Administration, was led by a 57.2 percent jump in shipments to Hong Kong that highlighted suspicions of false transactions used to mask capital flows into China, reported Bloomberg.

At the time, Royal Bank of Scotland said export gains may had been overstated by as much as 9 percent.

Gordon Chang, a well-known China critic, wondered if other false numbers lurked in the ledgers.

Even Li Keqiang, with a PhD in economics, has expressed concern over the accuracy of China’s financials. Before becoming premier, he questioned the reliability of Chinese GDP.

Disbelievers notwithstanding, analysts say that, even if exports were accurately reported, China would still take the crown from America. They point out that when the Department of Commerce releases 2013 trade figures in February, we will see that China topped the U.S. by about $250 billion.

“Just about everyone makes the reasonable-sounding argument that Beijing’s numbers, as atrocious as they are, cannot possibly be a quarter trillion dollars off,” said Chang.

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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