I usually compare trade data from China – but as now in Lombok and rolling electrical outages – decided to give the Chinese export data a weeks leave.
My thanks to Bloomberg’s Tom Orlik which saved me heaps – wherein he notes – China’s March imports from Hong Kong soared an implausible 116% YoY – yes you read that correctly – a large increase.
Clearly disguising capital flows – through Trade ”misinvoicing” – as a way to hide capital flows remains a factor.
In the past, over-invoicing for exports was used as a way to hide capital inflows.
The latest data show the reverse phenomenon – as represented in the graph compiled by Bloomberg below.
Now that looks ridiculous – yet it is what it is – capital flight from China.
As the Panama Papers revealed – a lot of the politburo have offshore accounts in tax free countries – a lot of capital has been transferred offshore – to acquire assets in other countries.
A global recession will have an impact on these assets – better than a depreciating / deflationary Yuan though.