Chinese Accused Of Inflating Trade Surplus Tenfold

China’s trade surplus is only a tenth of the $61 billion reported by the government so far this year after accounting for fake transactions used to disguise hot-money inflows, Bank of America Corp. said Monday.

The true surplus is about $6 billion, Lu Ting, Bank of America’s head of Greater China economics in Hong Kong, told Bloomberg. That would be the smallest figure for the January-April period since a $10.8 billion deficit in 2004.

Lu’s calculations indicate that the surplus shrank instead of tripling from a year earlier, a sign that global demand is restraining rather than boosting the Chinese economy. Bank of America’s estimate underscores the enormity of possible discrepancies in the trade data, which has been disputed by analysts for four months, and broader skepticism about Chinese statistics from GDP to jobs.

“Growth is weak in China now -- the overstated export growth means the real growth is slightly weaker,” said Shen Jianguang, chief Asia economist at Mizuho Securities Asia Ltd. in Hong Kong. “We are expecting to see a fairly big drop in export growth in the coming months” as regulators crack down on so-called hot-money inflows, he added.

Beijing reported a trade surplus of $18.8 billion for the first four months of 2012.

Lu said the gimmicks may have included exports and imports that enabled money flows for people engaged in arbitrage between the onshore and offshore exchange rates for the yuan. He speculated that gold shipments in and out of Hong Kong have been for this purpose, since valuable goods with low transportation costs are “ideal channels” for hot money flows.

Liu Zhengwen, a business manager in Shenzhen who handles exporters’ customs and foreign-exchange settlement, told Bloomberg this year’s export situation “feels like 2008,” when shipments began crashing because of the global financial crisis. “There’s no money to make from normal operations -- that’s why gray-area or illegal practices emerge," he said. "… A friend in my industry just visited me and talked about forging documents to make money. I don’t want to take the risk.”