Flawed Import-Export Data Downplays China’s Economic Plight

China appeared to whitewash its disappointing customs agency report, but can’t hide a worsening economic slump, experts say.

Cosco shipping corporation's container ships Cosco Pride (L) and Xin Lian Yun Gang are unloaded at the Tollerort Container Terminal, in the harbor of Hamburg, Germany, on Oct. 26, 2022. Photo by Axel Heimken / AFP via Getty Images

China’s customs agency released an import-export report this month that was riddled with errors in critical data. Financial experts say the errors are no oversight, but are most likely a deliberate tactic by the Chinese Communist Party (CCP) to downplay the country’s worsening economic plight.

The General Administration of Customs claimed on Dec.7 that Chinese imports and exports had “remained flat” in the first eleven months of this year, reporting that November 2023 saw a trade surplus of $68.39 billion, an increase of 4 percent year-on-year.

The Epoch Times found the data to be inadequate. On the contrary, the trade surplus not only failed to increase but instead decreased by 2.1 percent, based on China’s $69.84 billion trade surplus in November 2022.

The CCP’s customs agency also said that in terms of the U.S. dollar, the total value of imports and exports in the first eleven months of this year was $5.41 trillion, “down 5.6 percent,” and the trade surplus, which reached $748.13 billion, “decreased by 2.7 percent” from last year.

However, based on the trade surplus of $802,044.1 million in the same period of 2022, the reduction in China’s trade surplus from January to November can be calculated as 6.7 percent, much higher than the official figure. Likewise, total imports and exports values this year, compared with $5.78 trillion in 2022, were actually reduced by 6.4 percent, not the officially quoted number of “5.6 percent.”

Several other key numbers were also miscalculated, underplaying the slump in foreign trade. For instance, in the first eleven months, China’s trade surplus with ASEAN (Association of Southeast Asian Nations), the European Union, and the United States shrunk by 15.2 percent, 21.9 percent, and 17.6 percent year-on-year, respectively. However, China Customs lowered the figures to 1.7 percent, 16.7 percent, and 11.6 percent.

Comparison of China's Trade Surplus, Nov. 2022 vs. Nov. 2023 The Epoch Times

U.S.-based financial commentator Zhang Jinglun told The Epoch Times on Dec. 11 that it’s “a joke” that the CCP’s customs department miscounted trade data, in light of today’s intelligent calculators and computational software. Such errors provide more evidence for widespread criticism that the CCP’s statistics are always faked.

On the other hand, “even if the CCP authorities have tampered with the data, it is not enough to cover up the decline in Chinese foreign trade,” said Mr. Zhang, adding that China’s trade surplus jumped dramatically as the rest of the world has distanced itself from the communist regime.

A Worsening Trade Deficit

China’s trade surplus has been falling for months. After a 30.8 percent year-on-year drop in October, the trade surplus continued to fall by 2.1 percent in November, reflected in a weakening trade with other countries.

China’s exports have fallen sharply this year, and its trade surplus with Europe and the United States has plummeted. At the same time, its trade surplus with emerging economies in Southeast Asia has also fallen heavily.

The CCP customs report did not specify trade data for individual countries.

Comparison of China's import-export data, November 2022 versus November 2023 The Epoch Times

The Epoch Times calculated that China’s trade surplus with Vietnam fell by 34.7 percent, its trade surplus with the Philippines by 32.6 percent, and its trade surplus with Singapore by 17.9 percent.

Moreover, China’s trade surplus with the European Union fell 31.3 percent in November, with France dropping 30.3 percent, Italy 46.1 percent, and the Netherlands 23.7 percent. In particular, the trade deficit with Germany widened by 301 percent year-on-year.

China’s trade deficit with Canada deepened by 9.8 percent in November and by a whopping 97.9 percent from January to November.

China’s trade deficit with Australia increased by 34.7 percent year-on-year in November, while its deficit with Latin America increased by 622.8 percent, including a 51.9 percent increase with Brazil. Its trade deficit with South Africa expanded by 305 percent.

Mr. Zhang said China’s foreign trade outlook was much worse in 2023 than it was in 2022, particularly in the year’s second half. Foreign exchange earnings are expected to dwindle severely, he said.

Economic Impact

According to Mr. Zhang, the substantial, sustained decline in China’s trade surplus will significantly impact its economy, which may, for example, lead to a drop in production and an increase in the unemployment rate.

“China is an export-oriented economy, and only when exports make money can industries for the upstream and downstream sectors be boosted and the employment rate increased,” Mr. Zhang said, adding that this year, the youth unemployment rate in some regions exceeded 50 percent, a rate that is “linked to the drop in trade surplus.”

A clerk counts stacks of Chinese yuan and U.S. dollars at a bank in Shanghai, on July 22, 2005. China Photos/Getty Images

Emphasizing the impacts of foreign trade on the yuan, Lin Hong (a pseudonym), a veteran financial professional in southern China’s Shenzhen, told The Epoch Times that the trade surplus is the primary source of foreign exchange reserves, and changes in the expected incremental volume of foreign funds are directly related to the stability of the yuan exchange rate. That, in turn, will have an impact on yuan asset prices.

“If Chinese currency’s value is unstable, traders will convert it into U.S. dollars or euros even though it is settled with Chinese yuan in some countries"—something feared by the CCP, Mr. Lin said.

Amidst a substantial withdrawal from China by developed countries, the CCP’s continued investment in Belt and Road will result in a net outflow of capital over the next few years, impacting the value of the yuan, Mr. Lin said.

He added that China’s direct investment in the countries associated with its Belt and Road initiative—an expanding diplomatic strategy through infrastructure development—has amounted to nearly $300 billion in the past decade.

On Dec. 8, the Wall Street Journal reported that investors withdrew $12 billion from China in the third quarter of this year (July-September) according to Bank of America Global Investment Strategies.