Fake figures, real penalties

Fraudulent data distort statistical base, official says

China will punish companies if they are found to be reporting fraudulent trade data, the customs administration said on Tuesday, as it published details on enforcement of a credit system for foreign trade enterprises.

Companies considered “discredited” may be subject to more stringent inspections when applying for government tax rebates, or see an impact on their import or export quotas, while company representatives may be restricted from traveling abroad.

“Only when discredited firms pay a high economic price can measures create the effect where firms ‘ dare not to be dishonest and cannot be dishonest’,” said a statement from the General Administration of Customs.

Measures announced by the agency and 33 government departments will punish companies for various infractions including smuggling, tax evasion, fraudulent company registration information and fake trade data, said customs bureau Vice Minister Li Guo.

“In order to combat false trade data, these joint disciplinary measures will be applied to companies that report fake trade data, which leads to statistical distortions,” said Li at a news conference in Beijing.

The Chinese government aims to create a complete social credit system to punish discredited companies, Li said.

He added that joint efforts among the various government departments will play an effective role in managing companies’ credit.

The punishment will be a warning as well as pressure for companies, Li said.

He noted that as if those compa- nies improve their regulatory compliance and management procedures, they can avoid losses from penalties and sanctions.

Li expressed the hope that more domestic companies will contribute to the sound and stable growth of China’s trade.

Analysts said that Chinese companies have used fake trade invoices as a way to move money offshore and avoid China’s strict capital controls.

The government has tightened oversight of cross- border capital flows in recent years as accelerating outflows contributed to a weakening yuan, which fell 6.5 percent against the US dollar in 2016.

Li declined to comment on the fake invoicing phenomenon when asked by reporters on Tuesday.