China's war on smog slows December rail, truck freight volume

BEIJING (Reuters) - China's rail freight volume in December posted a year-on-year decline for the first time in 18 months and road transport grew at its slowest pace in a year, data showed on Wednesday, the latest sign that Beijing's war on smog has curbed business.

The slowdown follows an extensive government crackdown on air pollution from factories that curbed the operating rates of heavy industries like steel and aluminium. December was the first full month of the measures, which came into effect in mid-November.

Transport volumes are a key barometer for activity in the steel and coal industries.

Rail freight volumes last month fell 3.8 percent from a year earlier to 303.87 million tonnes, the lowest since June 2017 and the first year-on-year decline since July 2016, the National Bureau of Statistics said.

Road freight, China's most popular form of freight transportation, grew by 5.6 percent to 3.3 billion tonnes, its lowest growth rate since January 2017.

The transport slowdown reflects a decline in China's fixed asset investment, which increased at its slowest rate since 1999 in December, signalling flagging growth in the world's second-largest economy.

"In 2018, rail freight volume might grow at a slower rate, as investment growth slows down and government policy on environmental protection is expected to continue," said Liu Xuezhi, an analyst at the Bank of Communications.

The decline in rail freight occurred even after the government ordered small factories in November to halve their use of diesel trucks and boost rail transport to limit air pollution.

For all of 2017, cargo carried by rail rose 10.7 percent from a year earlier to 3.69 billion tonnes, reversing a 0.8 percent decline in 2016. Full-year road freight rose 10.1 percent to 36.8 billion tonnes.

(Reporting by Beijing Monitoring Desk and Josephine Mason; additional reporting by Hallie Gu; Editing by Richard Pullin and Christian Schmollinger)