Forget slower growth, worry about Chinese GDP contraction
The turmoil on Chinese share and currency markets, and worries about the true extent of the country's economic slowdown continue to rattle investors.
The health of the Chinese economy is crucial for metals and minerals prices. China represents more than 70% of the seaborne trade in iron ore and imports roughly 40% – 50% of the world's base metal production.
But getting a handle on China's real GDP numbers is difficult with Beijing showing a propensity to massage official numbers to fit its agenda and assuage any doubters about its ability to steer the economy.
So far Chinese authorities have maintained the country remains on track to meet official forecasts of 7% GDP growth in 2015. That would be the slowest in more than two decades but still a healthy clip for an economy that's now the world's biggest in terms of purchasing power.
Other indicators of domestic economic activity including construction starts, exports and vehicle sales point to a much more dire situation. But one number really stands out.
State news outlet Xinhua on Tuesday announced China's rail freight volume plunged 10.9% year-on-year to 278.9 million tonnes in July.
For the first seven months of 2015 the decline is a whopping 10.2% to 1.98 billion tonnes compared to the same period in 2014 according to the National Development and Reform Commission.
The NDRC blamed – what else – "plunging demand for transportation of major commodities, including coal and metals" for the weak numbers.
Not a slower rate of growth but a double digit and accelerating contraction: It's a startling number which hasn't been as widely quoted by newswires and analysts as you would expect.
Perhaps with so much going on – unprecedented currency devaluation, crazy stock markets and port explosions – it's just too difficult to absorb more bad news from the Middle Kingdom.
Hidden inventory and the Chinese carry trade