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Friday, March 8, 2013

Three Reasons to Doubt China's Export Numbers $FXI

Three Reasons to Doubt China's Export Numbers $FXI

In spite of the two-week Lunar New Year holiday in February, which typically translates into a slower period for economic activity, China's export numbers blew past expectations, coming in more than double of what was forecast, raising questions over the reliability of the data.
The world's second largest economy on Friday reported a 21.8 percent jump in exports for February from a year earlier, versus forecasts for a rise of just 10.1 percent. Imports, meanwhile, declined by 15.2 percent over the same period, the largest drop in 13 months, compared with expectations for an 8.8 percent fall.
There are three main reasons to question this data, according to experts, including Zhiwei Zhang, chief China economist at Nomura.
First, Zhang said, the data is "inconsistent" with exports out of neighboring countries including South Korea and Taiwan, which saw a decline of 8.6 percent and 15.8 percent, respectively, last month. He noted that China and South Korea's export growth is positively correlated. For both countries, the U.S. and Europe are key export destinations.

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