Chinese rail freight slowed in December

China’s rail freight volume in December posted a year-on-year decline for the first time in 17 months, according to new government figures.

It’s being seen as the latest sign that Beijing’s war on urban pollution is putting the brakes on business. The slowdown follows an extensive government crackdown on air pollution from factories that curbed the operating rates of heavy industries like steel and aluminum.

The decline in rail freight occurred even after the government ordered small factories in November to halve their use of diesel trucks and boost rail transport to limit air pollution.

Key barometer

December was the first full month of the measures, which came into effect in mid-November, reports Reuters’ China office. Transport volumes are a key barometer for activity in the steel and coal industries. Rail freight volumes in December fell 3.8 per cent from a year earlier to 303.87 million tonnes, the lowest since June 2017 and the first year-on-year decline since July 2016, the Chinese National Bureau of Statistics said.

The transport slowdown reflects a decline in China’s fixed asset investment, which increased at its slowest rate since 1999 in December, signalling slowed growth in the world’s second-largest economy.

Policy

Liu Xuezhi, an analyst at China’s Bank of Communications, said: “In 2018, rail freight volume might grow at a slower rate, as investment growth slows down and government policy on environmental protection is expected to continue.”

For all of 2017, cargo carried by rail rose 10.7 percent from a year earlier to 3.69 billion tonnes, reversing a 0.8 percent decline in 2016. Full-year road freight rose 10.1 percent to 36.8 billion tonnes.