China Exports Miss Forecasts as ‘Absurd’ Data Probed; China Export Gains Miss Forecasts for First Time in Four Months

China Exports Miss Forecasts as ‘Absurd’ Data Probed; China Export Gains Miss Forecasts for First Time in Four Months

China’s exports rose less than forecast for the first time in four months, leaving the world’s second-largest economy with weaker global demand to support a recovery than previous figures indicated.

Shipments abroad increased 10 percent from a year earlier, the customs administration said today in Beijing. That compares with 21.8 percent growth in February and the 11.7 percent median estimate in a Bloomberg News survey of 36 economists. Imports rose by an above-forecast 14.1 percent in March, leaving an unexpected trade deficit of $880 million.

The slowdown breaks a pattern of above-forecast figures that spurred concerns by economists at banks including Goldman Sachs Group Inc. that export gains were overstated because of companies inflating reported trade. Weaker trade growth also adds to Chinese Premier Li Keqiang’s challenges in sustaining a rebound while he tries to limit nontraditional banking and damp housing prices.“China’s export growth is expected to decelerate further in the second quarter as demand in the U.S. and Europe remains weak,” Li Wei, a Shanghai-based economist with Standard Chartered Plc, said before the release.

The customs administration will have an opportunity to address skepticism about recent figures at a briefing today in Beijing. The agency hasn’t commented on the data’s integrity beyond a January statement defending their accuracy. The agency said that every dollar of trade is documented and that the statistics only record companies’ actual trade with overseas partners, including those in Hong Kong.

Forecast Range

Estimates for export growth last month ranged from 5 percent to 18 percent. Economists projected import gains of 6 percent, based on the median forecast of 35 respondents, while the median projection for a trade surplus was $15.15 billion.

Gains in overseas shipments exceeded forecasts by at least 7.5 percentage points in December, January and February, the first time that’s happened in three straight months in the eight years Bloomberg has compiled analyst estimates for the data.

The government last month set a target of 8 percent trade growth this year, down from 10 percent in 2012.

If China’s export data in the first quarter were inflated, gains in coming months may be below par, Alistair Thornton, a Beijing-based economist at researcher IHS Inc., said before today’s release. “It will pull back on GDP at a time when there will be headwinds from the property market and shadow banking,” Thornton said of gross domestic product.

Falling Yen

A weakening yen may also pose challenges for China’s exports, complicating the nation’s monetary policy, billionaire investor George Soros said this week at the Boao Forum for Asia in China. Japan’s currency has fallen about 22 percent against the yuan in the past six months as new Prime Minister Shinzo Abe steps up efforts to beat deflation.

China Cosco Holdings Co. (1919), the nation’s biggest shipping company, on March 27 reported a wider-than-expected annual loss of 9.56 billion yuan ($1.54 billion) as dry-bulk rates slumped.

China’s economic expansion may have accelerated for a second period to 8 percent in the first quarter, according to the median estimate of analysts. The Asian Development Bank yesterday projected growth will pick up to 8.2 percent this year from 7.8 percent in 2012.

To contact Bloomberg News staff for this story: Xin Zhou in Beijing at xzhou68@bloomberg.net

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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