China Freight Transport Report Q1 2016
BMI View: The Chinese economic slowdown will continue and the impact of net imports of commoditieswill intensify, affecting the freight sector with weaker than previously expected commodities imports. Ironimports will remain depressed on the back of a weaker steel production. However, private consumption willcontinue to be robust, exports continue to decline but at a slower pace amid some signs of improvingforeign demand supporting freight volumes. Road will continue to remain the most important freight mode,also helped by consumer demand. We maintain a below-consensus growth forecast for China, including a5.9% real GDP expansion in 2016.
The slowdown in the Chinese economy will result in the GDP growth averaging 5.9% over the next decadeas opposed to the 10.1% average seen over the past decade. The growth rate is at the slowest annual rate in25 years. However, its trade dynamics will remain strong on the back of a declining albeit robust exportsector and outperforming private consumption, which will boost freight volumes. The recent cut in interestrates by the Chinese Central Bank has fuelled fears that the economy is about to slow further, with a declinein exports due to the high value of China's currency being the biggest factor. However, with more economicstimulus in the pipeline, this could also be seen as a strategic step on the way to a stronger looking Chineseeconomy.
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