Mainland Chinese export growth has slowed yet remained resilient, with shipments to Hong Kong showing an unusual surge and fuelling speculation about a capital rush into the mainland through inflated export bills.
Faster capital inflows have been seen by way of a jump in foreign-exchange assets held by financial institutions, as interest rates are higher on the mainland than in Western countries.
Additionally, upwards pressure on the yuan has intensified following Japan's announcement of major monetary easing, making the currency more attractive.
In March, mainland export growth slowed to 10 per cent from a year earlier, after a year-on-year gain of 21.8 per cent in February. Imports rose 14.1 per cent after falling 15.2 per cent in February.
The mainland posted its first trade deficit since February last year, albeit a modest one, at US$880 million. However, the first quarter as a whole saw a trade surplus of US$43 billion, up from just US$210 million a year earlier.
"Taking all the numbers at face value, we should say that China's exports remained fairly resilient and the pick-up in imports suggested recovering domestic demand," wrote Societe Generale economists Klaus Baader and Yao Wei in a note.
However, they suggested caution in interpreting the trade report, citing "various data inconsistencies". Many other economists also pointed out similar discrepancies, calling the data puzzling.
While the mainland reported 44.9 per cent year-on-year growth in exports to Taiwan in March, data released by Taipei showed the island's mainland imports shrank by 1.2 per cent, Societe Generale noted.
Mainland exports to Hong Kong surged 93 per cent in March from a year earlier to US$48.4 billion, the strongest growth since March 1995. But there was a 6.5 per cent decline in mainland exports to the United States and a 14 per cent drop in shipments to the European Union.
"Given that a lot of exports to Hong Kong are actually re-exported to the EU and US as final destinations, this seems a little incongruous, to say the least," wrote Ren Xianfang and Alistair Thornton at IHS Global Insights in a research note.
"Some of the exports booked could be disguised capital inflows, with renminbi being moved into the country to benefit from the cyclical upturn."
Also, there's "plenty of anecdotal evidence" to suggest that exporters are faking orders and "round-tripping" in order to gain export tax rebates, they added.
Faster capital inflows would put upward pressure on the yuan, which would in turn hurt Chinese exports, analysts said.
Zheng Yuesheng, a spokesman for the Customs bureau, said exports to Hong Kong surged partly because some factories transferred raw materials and products to the mainland's central and western regions from its coastal regions, using Hong Kong as a transit point.
Some multinationals have also set up global logistics centres in Hong Kong, which would also boost trade data, he said, adding that the bureau will investigate reports of fake export orders.
Australia and New Zealand Banking Group said: "Artificially strong export numbers could also result in misinformation and policy failure."
The People's Bank of China will likely encourage yuan volatility to deter the inflows, and the currency would probably "be jawboned to the weak side" in the near term, ANZ said.