China’s rail cargo hurtles into hard landing

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One of the preferred gauges of economic activities by our dear vice premier Li Keqianghas just turned really ugly.

Rail cargo volume growth turned negative for the first time since the recovery in June. The latest number for July is ugly.

Cargo volume transported by railways amounted to 305 million tonnes for July 2012, or 8.2% below the same month a year ago, according to figures from the National Bureau of Statistics. Rail cargo volume growth for July has worsened from –3.1% yoy in June, and it was the biggest decline since March 2009. Meanwhile, other modes of transportation, which do not have tight correlation with GDP growth, continue to grow randomly, from 13.2% yoy growth for highways to –3.4% yoy for aviation.

The chart below shows mainly rail cargo volume year-on-year change and GDP growth:

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This confirms other indicators we saw for July and August that economic activity does not appear to have found the bottom.