Pragmatic Capitalism

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Chinese Rail Traffic Points to GDP Turnaround

By Marc Chandler, Global Head of Currency Strategy, Brown Brothers Harriman

Many economists and observers are skeptical of the validity of much of China’s economic data. Apparently, they are less skeptical of the electricity production and consumption and freight volume. These times series are often used to get a better handle of Chinese growth.

This Great Graphic comes from Also Sprach Analyst. The first chart (below) shows various modes of goods transportation and China’s GDP. The best fit is with freight traffic.

The second chart focuses on rail cargo volume. The volume of China’s rail freight in October was 3.2% lower on a year-over-year basis (vs -5.4% in September), but on a month-over-month basis increased by 5.8%.

The key take away is that the rail traffic lends credence to the recent series of data that suggest the world’s second largest economy is stabilized after slowing for the past seven quarters. Globally speaking, this is a small offset to the prospects of weaker US, Europe and Japanese growth profiles.

(Figure 1)

(Figure 2)


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