Estimating Trade Mis‐invoicing from China: 2000–2005

Abstract

An examination of available data reveals large trade misinvoicing between China and its trade partners. The analysis finds a net trade misinvoicing of US$287.6bn between 2000 and 2005, while the full magnitude of unrecorded trade is estimated at US$1.4tn. China needs to establish more effective management of its international trade flows. At the same time, the international community needs to provide more effective governance mechanisms to address trade misinvoicing.

Trade Misinvoicing: The Dark Side of World Trade

“…Fisman and Wei (2007) analyse illicit trade in cultural properties and find that misinvoicing in such products is highly correlated with the extent of corruption in the exporting country, a finding confirmed by Berger and Nitsch (2008) using an extended set of product categories. Beja (2008) values the amount of China’s unreported trade between 2000 and 2005 to be $1.4 trillion. Farzanegan (2008) applies a multiple indicators multiple causes (MIMIC) approach to study the determinants and extent of illegal trade in Iran.…”

Capital Flight and Trade Misinvoicing in Zimbabwe

“…ZimTrade () shows that the main minerals exported are gold, diamond, platinum, ferro‐chrome alloys, nickel, and asbestos. Other existing studies that estimate trade misinvoicing, but do not focus on Zimbabwe, are Beja () for China; Rustomjee () and Wood and Moll () for South Africa; Yalta and Demir () for Turkey; and Patnaik et al . () for developing countries.…”

China's capital flight: Pre- and post-crisis experiences

“…Trade misinvoicing is a well-documented way to circumvent regulations and move money illicitly across national borders (Bhagwati, 1981(Bhagwati, , 1964Cardoso and Dornbusch, 1989 See, for example, Beja (2008) and Kar and Freitas (2012). The value of 10% corresponds to the IMFs estimate (International Monetary Fund, 2015, 2010, 1993.…”