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To: Lalit Jain who wrote (26077)	1/13/1999 1:55:00 AM
From: Zardoz	Respond to of 116786

"A computer glitch resulted in the early release of the department's report on prices charged by producers of finished goods last month and last year" Yeah, a glitch. I really believe that one. More likely they wanted it released. Right?

To: Lalit Jain who wrote (26077)	1/13/1999 10:41:00 AM
From: Alex	Read Replies (1) \| Respond to of 116786

The Mystery of China's Missing Billions Surprise: the numbers don't add up China announced yesterday that its foreign exchange reserves increased to $145bn (£88bn) last year, raising the embarrassing question of where most of the $88.9bn in reported trade and investment gains has gone. In the past, the increase in China's forex reserves has mirrored the gains from the country's trade surplus and inward investment. But last year the reserves climbed just $5.1bn from a year earlier despite a trade surplus of $43.6bn and inward investments of $45.3bn. Chinese officials and economists said that there were many reasons for the yawning discrepancy, some of which are widely known and others which have only recently become clear. "The number of illegal activities last year means that both the trade surplus figure and the investment inflow figures are very inaccurate," said one trade official. Another trade official said: "The figure for foreign direct investment in 1998 is exaggerated. A lot of it is money which has been promised but not invested in China." Officials said that another distortion arose from the fact that some foreign currency loans, especially from Hong Kong, appear in China's statistics as direct investment. A significant number of these loans are believed to have gone to Chinese entrepreneurs, mostly in southern China, who have created fake foreign ventures by setting up a shelf company in Hong Kong and then using it as a "joint venture" partner. Other explanations included increased profit repatriations by foreign companies, currency fluctuations affecting the dollar value of the reserves and the fact that from the start of this year, some enterprises have been allowed to keep 15 per cent of their foreign currency export earnings. Export figures may also have been inflated by another scam - the shipment of fake goods, or even virtually empty containers, abroad. In one example, sand was poured into computer casings to replicate the weight of real computers in the hope of avoiding detection by customs officials. Officials said that the volume of fake exports, combined with the notional value of forged export certificates, has been considerable, though no figures were available. Export certificates are useful in China because authorities often require to see them before granting permission to import. Several irregularities have occured to skew import data. The titanic battle that security forces fought last year against smuggling indicates that the volume of smuggled goods has been huge. Gun battles have flared between smugglers and police, accounting for a fair proportion of the official toll of more than 400 murdered police officers last year. Beijing has established a special anti-smuggling security force because customs authorities in some local-ities can no longer be trusted. Import documents have been forged to the tune of "several billions of US dollars", officials said. But once the foreign exchange has been obtained, it has often either been sent abroad to seek investment returns or been used to buy smuggled imports. It is clear that the battle against smuggling and foreign exchange fraud will rage for some time. The Financial Times, Jan. 13, 1999