A Ruthless Character: Export Data of 376.8 Billion Looks Dazzlingly Beautiful, But After Squeezing Out the Water Only 3200 Billion Remains! Chip Volume-Price Divergence, A 63% Surge in Exports to Hong Kong Hides Capital Flight, 100 Billion Trade Surplus Yet Foreign Reserves Remain Unmoved—A Forensic Accounting Dehydration Report Debunks the Makeup and Floodgates Behind China's Record-Breaking Exports

Observe things as they are, reject fragmented cognition.

The Chinese Communist Party (CCP) has now completely turned data into a political project, so to speak.

I carefully looked at some data a couple of days ago: the General Administration of Customs of the CCP released the foreign trade data for May, and the numbers were so dazzlingly beautiful that they were practically blinding.

The total monthly import and export value reached $648.13 billion, with exports at $376.78 billion, a year-on-year increase of 19.4%, hitting another historical high; imports were $271.35 billion, an increase of 27.4%; the monthly trade surplus reached $105.43 billion.

You might be very confused, and I am very confused too. Isn't the whole world shouting about decoupling risks? Yet here in China, exports are hitting new highs again, and the surplus is absurdly large. The CCP's embellishment is very smooth, and they have started spouting nonsense about how "Made in China is irreplaceable."

Fine, doesn't the CCP love export data? Today, let's use high-purity makeup remover to wipe off the powder on the CCP's face. After wiping it off, let's see if this thing is human or a ghost.

Today, we will use a full set of forensic accounting tools to peel back the $376.8 billion that the CCP is bragging about, layer by layer, to see how much of it is water and how much is solid substance.

Let's state the conclusion first: after squeezing out the water, according to my most conservative estimate, China's actual export scale in May was roughly between $310 billion and $329 billion.

How was this number calculated? The water is hidden in three pockets, and we will talk about them one by one.

First, let's break down the total volume to see what exactly is hitting new highs.

In the first five months, exports of high-tech, high-value-added mechanical and electrical products grew by 18.4%, accounting for 63.6% of the total export value. Breaking it down further, there are actually two main engines.

The first is benefiting from the capital expenditures of American giants. In May, exports of automatic data processing equipment, i.e., servers and commercial computers, reached $26.89 billion, a year-on-year increase of 6.1%, which is also a new high.

There are also primary integrated circuits, with monthly export value increasing by 110.9% year-on-year, which is 10.8 percentage points higher than the previous month.

Note that some institutions have calculated that these two types of commodities alone drove 9.4 percentage points of the overall export growth in May, contributing more than half of the monthly export increment.

What does this mean? In other words, half of the table in this so-called export prosperity in China is all AI.

The second engine is equipment. Exports of new energy vehicles grew by 43.1% according to the CCP's metrics, and the value grew by 39.3%. The second item is lithium batteries, which had a cumulative growth of 47.5% in the first four months. Ranking third, with relatively fast growth, are ships, which grew by 31%.

And for the entire month of May, the overall export of high-tech products grew by 5.29%, accounting for 29.8% of total exports.

What about traditional labor-intensive products?

For example, light industrial goods were down 0.2% year-on-year in May, just climbing up from negative 1.9% in April. And things like clothes, pants, and socks—footwear and headwear fell by 4.9%, which is quite miserable; toys fell by 7%; luggage and appliances fell by 4.9%. This sector is purely dragging its feet.

So from this structure, we can see very clearly: what is holding up the facade are integrated circuits, servers, and electric vehicles. This divergence itself is not a problem, but the problem is that, as you will see next, the composition of this thickest pillar is quite suspicious.

A very realistic question is: where were these abnormal exports sold to?

Let's look at the breakdown data, which is the flow of goods. There are several main flows.

First, exports to the United States surged from a deep decline of 16% in the first quarter to a positive growth of 35.4% in May.

It sounds like China-US relations have improved, as if China and the US have made up, but that is not the case.

There are several reasons. The first and most important one is that the base figure for the same period last year was extremely low; by May of last year, it had basically hit rock bottom. The second reason is that the United States technically lowered effective tariffs on some Chinese goods. Another crucial factor is expectations.

US importers are gambling. They are betting that there will be even harsher tariffs after the midterm elections, so they are sparing no expense to book shipping space and stockpile goods in advance.

To translate: this is not a recovery in demand at all; this is doomsday stockpiling.

Second, exports to ASEAN grew by another 24.3%, with ASEAN firmly holding its position as the largest trading partner.

The reason behind this is clear to everyone: origin laundering.

Now, whether it is Europe, Japan, or the United States, they are all tightening rules of origin. Starting last year, a large number of Chinese companies went to Vietnam, Malaysia, and Thailand. What is China doing now? It is exporting machinery, components, and even semi-finished products to these factories, which then go around in a circle before entering Europe and America.

Third, this part is the protagonist: exports to Hong Kong increased by 63.1% year-on-year.

Does Hong Kong have any manufacturing entities? No.

This 63.1% is almost entirely re-export trade. Re-export trade itself is legal, but the problem lies in the fact that this scale is so abnormally magnified. When you add in the CCP's blockade on foreign exchange and cross-border investment over the past few months, and put these two together, I don't need to say much about what kind of shady business is going on here.

Isn't this export growth just the art of moving money from one hand to the other?

To put it bluntly, it is a trick to make assets disappear out of thin air.

How is this part operated? Let me explain it clearly to you.

Suppose you have a manufacturing factory in China, called Company A. Then you also have another trading company in the Cayman Islands or another tax haven, called Company B. These two companies appear to be independent, but the actual controller behind them is you.

In normal business, if Company A makes money, you have to pay a 25% corporate income tax in China. If you want to put the profits into your own pocket, you have to pay another 20% personal income tax. Moreover, under the current foreign exchange controls, there is basically no way for tens or even hundreds of millions in funds to flow directly overseas.

What to do?

At this time, something called "transfer pricing" makes a grand entrance. It has only one core purpose: to forcibly transfer profits from high-tax, highly regulated regions to low-tax, zero-regulation regions, achieving the legal flight of capital.

These people mainly rely on the following three-step combo.

First, buying high. The goal is to keep costs in China and send profits abroad.

For example, Company A needs to import a batch of materials. The market price should be 100 yuan, but you have Company A purchase them from your own overseas Company B at an exorbitant price of 500 yuan. The result is that Company A's costs soar instantly, and on paper, it not only makes no money but actually shows a huge loss. This way, there is no need to pay Chinese corporate income tax. And the 400 yuan price difference paid out becomes the legal profit of Company B.

Second, selling low, or selling assets at a dirt-cheap price. This means keeping profits overseas.

For example, Company A produces a batch of mobile phones with a cost of 1,000 yuan, and they can be sold for 2,000 yuan on the market. But you don't let Company A sell them directly to real overseas customers; instead, you sell them to your own Company B at a bargain price of 1,001 yuan first. Company B then sells them to the end users for 2,000 yuan.

Company A works for a year, earning only 1 yuan per phone, and pays very little tax. The remaining 999 yuan in windfall profit is kept overseas by the overseas company.

Third, relying on the black box of intangible assets.

This is the hardest to investigate because there is no so-called standard market price.

For example, your overseas Company B creates a trademark or a set of management experience and authorizes Company A in China to use it. Every year, it charges Company A huge royalties, information management fees, brand management fees, and the like. Just by saying the word, you can siphon profits overseas.

Let's look at another set of data. This is also the biggest mystery in the sub-item data: integrated circuits.

In May, the export volume of integrated circuits grew by only 2.1%, but the value surged by 110.9%. If we look at the longer term, it is even more absurd. In the first five months, the volume grew by 8.7%, but the value increased by 90%.

Not many more boxes of goods were shipped, yet the money nearly doubled.

So, how did that money inflate?

We trace the journey of a shipment backward.

Currently, the whole world is scrambling for high-bandwidth memory and high-performance graphics chips, and the prices of upstream core components have been pushed to the sky. In this chain, China is often just the packaging link, the final country for assembly and export of finished products.

This means that a large portion of the export value written on customs declarations is first bought in at a high price and then resold as is. China does not determine whether prices rise, nor does it hold the profits. China is merely a bookkeeper in this global price hike.

Then there is the freight component.

In May 2026, the shipping market was experiencing a century-level price surge. The Shanghai Containerized Freight Index rose throughout May, returning above the 2000-point mark. The Red Sea crisis led to detours, and shipping capacity was entirely burned at sea. A large amount of export value is declared under CIF price terms, causing freight and insurance to be fully calculated into the value of the goods.

Consequently, the CCP started using its brain: since the value can be decoupled from physical growth, why not just skip the goods and create the value directly? Various export KPIs have long become performance indicators for local governments.

Let's cross-verify.

The CCP brags about a trade surplus, so we check the corporate profit and loss statements.

In the first quarter of 2026, 42 listed photovoltaic companies suffered a total loss of 13.179 billion yuan; adding the other 38 profitable companies, they only earned 6 billion yuan. The entire industry is already in deep loss.

Orders look quite impressive on the books, but that is because customers are already losing so much they can't even settle payments for shipments. When recognized as revenue in financial terms, the orders are just pies drawn on paper.

Finally, look at the cracks.

In May, the monthly trade surplus in goods was $105.4 billion. Logically, with a surplus of this magnitude, foreign exchange reserves should show a trending upward movement.

The reality is that at the end of May, foreign exchange reserves were only $31.7 billion higher than at the end of April, and the State Administration of Foreign Exchange itself stated that this increase relied on the conversion effects of the US dollar index and asset prices. The contribution of the trade surplus to the flow side was zero.

On one side is a surplus in the hundreds of billions, and on the other, foreign reserves are standing still. Where did the money go?

In April, the surplus in trade in goods and services was 407.5 billion yuan, equivalent to about $53 billion. However, the bank settlement and sale of foreign exchange surplus for the same month was only $40.1 billion. This means that only 70% of the money earned was actually converted back into RMB and returned to the Chinese system. The rest either sits in corporate overseas accounts waiting, or continues to flee directly through various gaps in the capital account.

This convergence of capital outflows is not a spontaneous market balance, but one squeezed out by CCP controls.

Now, reviews of foreign exchange purchases for US dollars and penetration checks on individual quotas have blocked all export loopholes. So we see stability on the books, but this is a stability squeezed out by a pressure cooker. The more stable the pot is held, the greater the pressure inside.

Finally, we build a model to squeeze out the water.

Step one: stop viewing the three parts of water as independent numbers, but as three components of a three-dimensional random vector: price inflation, transfer pricing and tax-fraud empty trade, and freight inflation. We assign a normal distribution to each component, take the lowest value pointed to by the evidence, and calculate a mean.

Step two: these three parts of water are not independent; they have strong correlations.

For example, the Hong Kong channel handles both transfer pricing and the return of tax-fraud funds; the same shell company uses the same underground network.

Step three: utilize the properties of normal distribution.

It is finally calculated that it follows a distribution with a mean of 12.5%. Based on this, the 90% confidence interval for the true export value is between $310 billion and $321.1 billion. The probability that the true scale exceeds $340 billion is only 0.9%, while the probability that the water exceeds 12% is as high as 98.4%.

The figure of $376.8 billion is approximately 10.8 standard deviations away from the model's expected value.

Statistically, the probability of 10.8 standard deviations is a once-in-ten-thousand-years event. The Chinese Communist Party (CCP) has created a miracle once again.

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