Rail freight volume down

The volume of freight carried on China's railways, an indicator of economic strength, witnessed a year-on-year decline in the first five months of this year, the national railway operator said Monday.

Railway freight volume, together with electricity consumption and lending, constitute what is known as Li Keqiang Index, as the Chinese premier preferred to use the three indicators to gauge the economy when he served as the Party chief in Northeast China's Liaoning Province between 2004 and 2007.

A total of 1.58 billion tons of cargo were carried on rail tracks from January to May, down 3.07 percent year-on-year, according to a statement published Monday on the website of the China Railway Corporation (CRC).

The national railway operator attributed the decline to the macroeconomic environment that weakened transport demand for goods.

Data in the past two years showed that the railway freight volume is likely to show signs of improvement only if the economy gains speed, Guotai Junan Securities said in a research note published Thursday.

As China's economy still faces downward pressure in the medium term, the railway freight volume is not likely to rebound, the note said.

The number of passengers transported by train, however, surged by 20.3 percent year-on-year to 199.74 million in May, boosted by the three-day Labor Day holidays, the CRC said, noting that it aims to grow revenue by increasing capacity for passenger transport.

Experts said the decline in railway freight volume is also a result of China's economic restructuring and increasing competition in the transport sector.

"As China is developing the tertiary industry that relies less on transportation of goods, the growth in railway freight volume will gradually return to a normal level instead of high rates seen in previous years," Hu Siji, a professor with the School of Traffic and Transportation of Beijing Jiaotong University, told the Global Times on Monday.

The drop in railway freight volume, Hu noted, was also due to increasing competition from other transportation channels.

"The railway sector needs reform as the quality is low compared to other means of transport," he said.

The CRC has raised freight prices by 0.015 yuan (0.23 cents) a ton per kilometer since February 15, a move analysts anticipate will bring down railway freight volumes.

In contrast, the volume of freight carried by road, water and air transport grew by 8.9 percent, 6.3 percent and 6 percent, respectively, in the first four months of this year, according to data from the National Bureau of Statistics (NBS). The May data from the NBS is not yet available.

The sluggish commodity market especially coal has dragged down railway freight, as the first half is normally a slack season for coal consumption, Liu Dongna, an analyst with Shandong-based consultancy Sublime China Information, told the Global Times Monday.

Premier Li highlighted the freight indicator when he delivered the government work report at this year's session of the National People's Congress on March 5.

Li noted that freight transport grew by 9.9 percent and electricity consumption rose by 7.5 percent in 2013 from a year earlier.

China's electricity consumption grew by 5.2 percent year-on-year from January to April, according to the NBS.

During an economic work conference chaired by Li on Friday, he noted that China will achieve its economic growth goals set earlier this year despite facing downward pressure, and reiterated the central government will not launch "strong stimulus" measures, according to a statement on the central government's website on Monday.

"The meeting delivered a message that the short-term growth is close to the central government's bottom line. If a batch of May economic data is still sluggish, it will raise the possibility of stronger pro-growth measures," Everbright Securities said in a research note sent to the Global Times Sunday.