China-Hong Kong Data Mismatch Persists Despite Crackdown on Fake Invoicing

A divergence between Chinese and Hong Kong bilateral trade figures remains even after a crackdown in 2013 on Chinese firms' use of fraudulent export-invoicing to dodge limits on foreign currency.

China recorded $1.31 of exports to Hong Kong in June 2014 for every $1 in imports of Hong Kong from China, resulting in a $6.4bn difference, government data compiled by Bloomberg News showed.

Pursued by the news agency, the General Administration of Customs in Beijing, which puts out the trade data, did not respond.

Hong Kong's Census and Statistics Department said the data sets cannot be directly compared because the city's computation method and law on trade declarations are different from China's -- goods in transit through Hong Kong are not included in the city's statistics, the department said.

Analysts have offered various likely explanations for the discrepancy.

"Sporadic fake exports certainly still exist," said Hu Yifan, chief economist at Haitong International Securities in Hong Kong.

The longer the data gap remains at this level, the more likely it is a permanent fixture. "If the ratio stays at 1.3 throughout the year, I think that's consistent," Hu told Bloomberg.

"You can't exclude the possibility that capital flows are being disguised as exports" in the China-Hong Kong figures, sad Yao Wei, China economist at Societe Generale in Paris.

"As the capital account becomes more open, the flows will show up in the places they should."

While there isn't a "big problem with the quality of trade data" any more, more time is needed to judge if the gap between China and Hong Kong figures is structural, Yao added. "Usually it's good enough if the year-on-year growth data are in the same direction."

Another possible explanation is the different methods of pricing shipping costs, according to Yao and Xu Gao, chief economist at Everbright Securities in Beijing. "A lot of things can explain" the disparity, Xu added.