Pre­cious metal ship­ments to Hong Kong un­der scru­tiny

China Daily (Canada) - - BUSINESS - By BLOOMBERG

In­ves­ti­ga­tors have been sent to the south­ern prov­ince of Guang­dong to probe a sev­en­fold surge in pre­cious-met­als ex­ports as China in­ten­si­fies scru­tiny of grow­ing ir­reg­u­lar­i­ties in trade fig­ures.

The team in­cludes staff from the Min­istry of Com­merce and Gen­eral Ad­min­is­tra­tion of Cus­toms, ac­cord­ing to peo­ple fa­mil­iar with the mat­ter who asked not to be iden­ti­fied be­cause the in­for­ma­tion has not been made pub­lic. Ship­ments of pre­cious met­als, in­clud­ing jew­elry, rose to about $10.8 bil­lion in Septem­ber from $1.39 bil­lion a year ear­lier, ac­cord­ing to cus­toms data.

The probe comes after China un­cov­ered almost $10 bil­lion in fraud­u­lent trade na­tion­wide as part of an in­ves­ti­ga­tion that be­gan in April last year. The probe found 94.4 bil­lion yuan ($15.2 bil­lion) of loans backed by fal­si­fied gold trans­ac­tions in June.

Hong Kong over­took the US in Septem­ber as the top des­ti­na­tion for main­land ship­ments, co­in­cid­ing with re­newed ap­pre­ci­a­tion of the ren­minbi and prompt­ing an­a­lysts in­clud­ing those at Ever­bright Se­cu­ri­ties Co and Aus­tralia & New Zealand Bank­ing Group Ltd to ques­tion the data.

“As the ren­minbi has started to ap­pre­ci­ate again and the in­ter­est rate dif­fer­en­tial re­mains large, round trip trade ac­tiv­ity be­tween Hong Kong and the main­land is bound to in­crease,” Liu Ligang, Hong Kong-based head of greater China eco­nomics at Aus­tralia & New Zealand Bank­ing Group Ltd, said on Thurs­day. “We have seen some sig­nif­i­cant dis­crep­an­cies in Hong Kong’s Septem­ber trade data from the main­land’s. Gold, given its na­ture of small bulk but high value, has been used for such ac­tiv­i­ties in the past.”

The cen­tral gov­ern­ment no­ticed the rapid in­crease in trade with­HongKong of some mer­chan­dise and will step up scru­tiny, Shen Danyang, spokesman for theM­i­nistry of Com­merce, said on Oct 16.

The main­land recorded $1.56 of ex­ports to Hong Kong last month for ev­ery $1 in Hong Kong im­ports, lead­ing to a $13.5 bil­lion dif­fer­ence. The surge in­cluded ship­ments of pre­cious­met­als, which have been at the cen­ter of dodgy in­voic­ing in the past, said Xu Gao, chief economist at Ever­bright Se­cu­ri­ties.

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