The mystery of Chinese data.

• Author: Smick, David
• Position: China imports influence economic conditions

It is hardly a secret that official Chinese economic statistics represent a wasteland of unreliability. As former Federal Reserve Chairman Alan Greenspan once cynically quipped when asked about the reliability of data coming out of Beijing, "You mean the system where the end of the fiscal quarter arrives and early the next morning the official GDP number is announced?"

In recent months, Chinese data have shown a significant expansion in imports. Normally that would mean Chinese investment must be accelerating (assuming of course that the data on imports are correctly calculated). This time, however, skeptics wonder whether the data showing an import explosion reflect less the investment environment and more the ramping up of efforts to move capital outside of China. Here's the inside thinking: In recent years international observers have recognized that the Chinese often inflate the size of import bills (in other words, the purchase price of a sale, say, of some commodity is intentionally charged at a much higher rate than the actual cost). This practice allows for the passing of capital overseas as the foreign interest involved credits the amount of the overpayment into an account outside of China in the name of the interested Chinese party. International strategists say that lately these inflated bills...