A surge in China’s imports from Hong Kong has raised fresh concern trade invoices are being manipulated to get capital out of the country. January data released Monday show imports from the territory leaped 108 percent from a year earlier even as total imports dropped by 18.8 percent and inbound shipments from other major trading partners fell. Economists at Macquarie Securities Ltd., Australia & New Zealand Banking Group Ltd. and Natixis SA said the unusual spike in Hong Kong imports points to companies using trade channels for financial arbitrage. Over invoicing for goods gives a company or individual the opportunity to skirt China’s capital controls and shift money off shore. “It’s very likely to be fake trade,” said Larry Hu, head of China economics at Macquarie. “That’s the main reason why imports from Hong Kong have surged.”

Capital Outflows

Savers and companies have been moving money out of China amid fear of further weakness in the yuan. Capital outflows soared to a record $1 trillion in 2015, Bloomberg Intelligence data show. While China has strict rules on moving capital, those seeking to evade limits can disguise money flows as payment for goods exported or imported to foreign countries or territories, especially Hong Kong. Economists have said previously that they suspect China’s December trade numbers were also skewed by this activity. China has acknowledged a problem with fake invoicing in the past. In 2013, the government said export and import figures were overstated due to the phony trade to bring money into the mainland. Trade data for December suggested the practice had flared up again, this time to get money out. The trade data suggest “import channels could have been used for some financial arbitrage activities,” Liu Ligang, head of greater China economics at ANZ in Hong Kong, wrote in a report Monday. To be sure, China’s imports from Hong Kong are relatively small at $1.65 billion compared with $12.4 billion from South Korea. Chinese authorities have been cracking down on outflows by enforcing existing capital controls and closing off channels such as savers buying insurance products in Hong Kong.