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The China-Europe freight train waiting for departure at Xiangtang railway port in Nanchang, east China's Jiangxi Province. Photo: Xinhua

Coronavirus: China reports surprising rail freight growth in February despite factory activity tumbling

  • Rail cargoes in China rose 4.5 per cent in February, despite much of the country’s economy being on lockdown due to coronavirus
  • Growth comes as factory activity and service sector output plunge to new lows in February, with analysts forecasting an economic contraction in the first quarter
China’s official railway operator has said that rail freight rose in February, despite the coronavirus outbreak forcing large parts of the country into lockdown, and the official purchasing managers’ indices for manufacturing and services tumbling to all-time lows.
China Railway, the state-owned railway operator, said in a statement on Sunday that total railway freight amounted to 310 million tonnes in February, a rise of 4.5 per cent from a year earlier, just a day after the National Bureau of Statistics (NBS) announced that China’s factory and service sector activity sunk into deep contraction.

The supplier delivery time sub-index in China’s manufacturing purchasing managers’ index (PMI), which measures logistics efficiency by railway, road and air for factories, dropped to 32.1 in February, a sign that raw material supplies to the manufacturing sector were at record lows last month, the NBS said.

China Railway, meanwhile, said that China loaded 171,000 railway cars per day on average last month, a daily increase of 4,945 from a year earlier. Container freight on railways surged 39.5 per cent to 26.61 million tonnes, it added, in an surprisingly stable account of China’s rail freight network.

In the January-February period, China’s freight cargo rose by 0.6 per cent to 670 million tonnes, an all-time high, according to China Railway.

Rail freight is an important indicator used by economists to gauge the health of the economy. According to WikiLeaks, China’s Premier Li Keqiang said in 2007, when he was the Liaoning party secretary, that China’s economic growth figures were unreliable and said that he looked three indicators instead, namely railway cargo volume, electricity consumption and bank lending.

Zhao Jun, the freight division chief at China Railway, said the rise was because the network focused on transporting “key materials” such as coal, medical equipment and production inputs.

This is despite the fact that coal consumption at power plants in China was much lower than usual, dipping well below previous years’ levels.

“China Railway has reached out to various levels of local governments and enterprises to respond to their logistics needs in terms of production resumption, raw material supply and shipments of finished products,” Zhao said in a statement.

In a note outlining disruptions to China’s logistics network released last week, Norman Global Logistics wrote: “Cargo pickup is affected by road closures and reduced availability of truckers. Controls are in place for long-distance trucking and crossing between provinces, causing delays and reduced capacity. Some cities only accept local number plate trucks to operate within cities.”

“Pick up from the eastern regions, Jiangsu and Zhejiang provinces are still limited and at a premium cost due to the reduced capacity,” the note read, adding that in some cities of China, including Zhengzhou and Xiamen, cargo pick-up at railway stations was suspended for most of February.

Compared to air, road and sea freight, rail freight in China is relatively immune to disruptions, as transport agreements for cargoes such as coal are locked in over long periods, even if the coal is not consumed. In addition, trains have not been subject to blockages by local authorities.

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