From Hard Landing To Train Crash, All Chinese Indicators Have Slammed On The Brakes

Tyler Durden's picture

As Robin might say "Riddle me this Batman": how can an country, supposedly growing its economy at over 7%, with factory output up over 9%, manage all of this superlative production while rail traffic is shrinking at almost 5.4% annually?


China Freight Traffic Volume - Railways:



Source: Sean Corrigan of Diapason Commodities

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SeverinSlade's picture

You mean the Riddler?  Robin is too busy giving Batman a HJ.

CPL's picture

It's time to short the fuck out of chinese shares.   Whos' got a shit list handy to look through.


I'm sure all of us shorting an object carried a bucnh more weight than just one of us.


Who wants to make some cash?

THX 1178's picture

WTF who is actually IN the market anymore?

GetZeeGold's picture



All in the ghost markets....we be grateful dead investors.


Pick a room....any room. They're all empty.


THX 1178's picture

HFTs-- the ghost(s) in the machine(s)

slewie the pi-rat's picture

no, that was slewie

pSinger, bGross & tylerD can kiss my fuking ASS!

CPL's picture

Nobody...but with a flag this big I would be retarded to not check it out.   Don't have to trade it.  But for the sake of interest the DD has to be done.  I would kick myself otherwise for not doing anything.  I am a curious monkey.


That information plus this information means China is going in for the hard ride down.

reload's picture

I`m in the same boat - having a close look at Aussie Banks, China needs research also.

Regarding China - another little tell may be that Brasil felt the need to unvail a recent stimulus package. Were they not building new ships and ports to keep up with Chineeses demand for eaw materials until very recently?

I never thought the west could pull a `Japan` anyway, and no way if the BRIC nations are spent forces for now.

Oh regional Indian's picture

And meanwhile the "I" in BRIC careens downwards on every metric.

Socio : Bad News

Political : Bad News

Fiscal : Screwed news

China has been built as a war economy, make no mistake. That much production will swing to making obscene amounts of hardware.

Beware the Bear and the Dragon. India too. China can literally and figuratively rain on our parade, any day.


bahaar's picture

India could actually do with some of that rain. 

Alas China pulled drew in all the rain (cloud seeding?) and India is parched.

financial apocalyptic contagion's picture

madarchod bahaar

In which corner of India are you holed up in?

It hasn't stopped raining in Gurgaon/Delhi for the past 20 days

Oh and fuck China

agNau's picture

Might be a good idea to have tight stops.

disabledvet's picture

"dark pools of Soros."like a ship that never comes to port...

SeverinSlade's picture

The answer is no one which makes things all fine and dandy while the markets are going up.  But in a game of hot potato, things are only okay as long as people continue to pass it back and forth.  Once the music stops and we have a genuine panic (and believe me, we will) then the markets will implode (as evidenced by the fact that volume always surges massively during risk off periods - takes the market weeks/months to rally significantly but days/weeks to drop like a brick).

Lofty's picture

Sshhh...Otherwise they'll unplug the Algo's.

slaughterer's picture

Hate to say it, but most of the best Chinese shorts (the reverse merger scams) were shorte here at Zh a long time ago.   You missed the China-scam basket Tyler put together for us a half year ago.   

CPL's picture

Those ones were the obvious ones.


I'm talking the LLEN's...Secondary markets like SAY...we are talking about a place on the planet that has NO resources.  All imported.  Food, autos, clothing...textiles...I know it seems odd but China has advanced enough as an economy that they can export inflation as well.


I'm looking for the ADR's that snuck under the radar.  The Tylers are in good standing with their picks.  But now we all have the opportunity to jack hammer a short chain unlike the world has ever seen.  My theory is a 80000% return by leap frogging from one short to another.  With the Chinese investors about to be allowed Margin...


HO HO HO!!!  I love the Chinese people...culturally gambling is what will crush their society...always has.  Chinese aren't known for their drinking or drug habits...but gambling.'ll be like shorting during  One fool after another lining up to get wiped out.

laozi's picture

China: Four typical features: 1. Gambling 2. Saving (at least 50% of income) 3. Working hard 4. Hierarchical structure

They might prove to be resilient due to 2 and 3.

If not, it is not gambling that will be their fall. It is point 4.

CPL's picture

Agreed, true organisational efforts have been so poorly managed, like we are seeing here, nobody really believes anything out of China numbers wise because to be wrong as a manager there also means that you get shot.


I'm still of the mindset that consumer credit in financial markets will be used just as amazingly poorly as the western world.  It's one thing when people are throwing away cash they have.  The shape of the situation is one where the investor can wait it out.


Add in an insane interest rate on borrowed money in a market with a beta build to cause trapeze artists to faint.  That makes a different makes a reactive animal.  It also opens up the possibliity of another technology feature once margins are allowed.


HFT/Algo trading.  The chinese get to fire up their first legion of them.  Can't operate an Algo without bear and bull.  All in all dangerous situation.   I won't go throwing money down a hole yet, but the situation is bad enough now that this move of nearly free credit wrapped around equities markets...well, see how well it's all going here.


Only people left are the big more wiggle room, no more playing in Western spaces...

laozi's picture

Most of what you said I simply do not understand, so I have to answer: "Yes, but you should also consider the effect of the deprecating Yuan." or some other nonsens :-)

laozi's picture

Agreed. China has been dropping like a stone for many months now. Still not sure if Wen consider this a "hard landing"? They might control this still, but they do not want to cut interest rate... so it has to be investments in INFRASTRUCTURE (yes again).

BigJim's picture

Someone explain this to me:

The Chicoms (or whatever we call them now) have Trillions in excees foreign reserves. They are also determined to keep their citizens mollified by increasing their wealth.

In the West, we did a lot of government-directed 'stimulus' even when we were already up to our eyebrows in debt.

Why won't the Chinese government do the same?

In an environment where anything like true price discovery has been eliminated, and deflation spells ruin for TPTB... isn't shorting them asking for trouble?

Banking on the PBoC not opening the money spigots to keep their own ponzi going a few more years (while they feather their nests and move more wealth offshore) strikes me as gambling.

laozi's picture

"In the West, we did a lot of government-directed 'stimulus' even when we were already up to our eyebrows in debt."

They can open the wallet, lower the interest and lower the capital ratio for the banks to ease the economy. But they do not want to, since they are actually trying to contain the housing bubble. Therefore infrastructure is all they have left to pour money into... even though they already have too much of it. More to come...

redd_green's picture

Re  "Why won't the Chinese government do the same?",  oh, they are.    Most certainly.   Railroad projects, subway projects, all sorts of infrastructuure, constantly updating the electrical grid and power generation.  Thera are many hundreds of billions going into infrastructure, which does stimulate the economy there.

ElvisDog's picture

Ask yourself, what is the obvious unintended consequence of massive stimulus? Food and energy price inflation. What is the one thing that will drive the hundreds of millions of working poor Chinese to desperation? Food and energy price inflation. That is why the Chinese government can't convert its Forex reserves into a massive stimulus program.

Another comment about infrastructure, which a lot of people assume is "good stimulus". Problem with infrastructure is once you build it, it needs constant maintenance, which costs money. Asphalt roads last about 2-3 years before they need resurfacing. Airports, railways, etc. all need constant maintenance too. So, if a country builds infrastructure beyond what that country needs it is a net negative, because there is an excess supply of that infrastructure (no real benefit) that is sucking maintenance costs out of the economy (misallocation of capital).

mkkby's picture

They don't care about maintenance. They build vacant cities just to keep their people employed and not rioting.  They're already letting it all rot.

_ConanTheLibertarian_'s picture

Have been in FXP for a while.

Jake88's picture

This comment gets 5 thumbs up. Doesn't say much for the readership of ZH. Or maybe this article just wasn't too long for some of the readers.

LawsofPhysics's picture

Awesome.  Simply Awesome.

CPL's picture

Yes it is.  Xmas in August.

LawsofPhysics's picture

The lies grow bigger by the day and the paper-pushers and their political puppets more desparate.

kridkrid's picture

Here is one I would like to add to the list of lies... and one that should make it abuntantly clear how "unified" the two parties are...

Gov't spending is relatively flat.  Obama has increased spending LESS than any president in the past 50 years... yet debt is EXPLODING!  GDP is increasing, but gov't revenue is COLLAPSING... wha-huh-wha?



LawsofPhysics's picture

There was a reason why excessive usury was punishable by death.  It eventually leads to greed, capital and resource mis-allocation and mal-investment.  There is a very cost for capital creation, but if all you are doing is creating capital to service debt, your economy is dead.  The bad debt or unproductive debt (debt that is not leading to real innovation of real goods) must be cleared from the system.  Until then the black hole that is sucking in all liquidity will continue to grow and the mal-investment and mis-allocation continues.

If history is any guide, shit will only get real when supply lines break and producers of real commodities people need to survive start defaulting on contracts to deliver.

kridkrid's picture

To make matters even worse... All "money" is loaned into existence with usury.  Only there isn't enough "money" in the system to pay both interest and principle.  By design the scenario is describe is baked into the system and there is no way out.  By Design.

Which is my point above.  The parties can nibble around the edges of the issue, but Obama can't outright defend his flat spending because it would ultimately expose the system for what it is.  There are only a few pieces of data that can't be manipulated... gov't revenue is one of them. 

redd_green's picture

Not all money, but you have hit the big nail.    Money is multiplied through the fractional reserve lennding system, but it is injected into the commercial banking system.    The original dollar created from nothing is backed by a treasury bond, which we, the taxpayers, must pay interest on forever.   The multiplier, could be up to 6 or 8 or higher, is a direct result of fractional reserve lending.

mkkby's picture

I assume you are US based (?).  Shit will get real when Europe, Japan and the UK crash and start to recover.  Then the US safe haven status will have competition.  When that happens the US will "go Greece" like every insanely over leveraged drunk must eventually.

chunkylover42's picture

Using very rough numbers:

Gov't spending is flat at $3.2 trillion/year

Gov't revenues are flattish at $2.1 trillion/year

$3.2 - $2.1 = $1.1 trillion in spending that must be funded.  It is done so through the issuance of new debt.  Ergo, debt increases rapidly (exploding, as you said).

Rate of change matters significantly, but nominal levels are just as important.

kridkrid's picture - I don't think gov't revenues are flat.  They may have "flattened"... but they have declined significantly from their high water mark.

I was surprised by my down votes, until I realized that my post may have looked like a defense of Obama.  It isn't... my post is a critique of our political system that is not able to tell a basic truth because the truth exposes a greater lie... the greatest lie, in fact... that our monetary system is fraudulent. 

Lednbrass's picture

There are an increasing number of deeply stupid people showing up here lately (DKos and Red State types), don't worry about it. A downvote from an idiot is not a problem as they are angered by reality, what you said is indeed the truth of the situation and the numbers can be verified.


Ar-Pharazôn's picture

i would not be surprised if on zh we have gov sponsorised trolls

Belteshazzar's picture

I wonder how much if any of that decline in rail traffic is due to increasing private car use.

CPL's picture


Not much.  ALL auto makers are getting caught in china channel stuffing.  The numbers from the entire auto industry are complete drivel.  Euopean makers are especially bad with the lying.  The US doesn't need to worry about spin control on this one.  Nobody in Asia buys US brands for the obvious reason they are the expensive import.


Western world couldn't figure out where things are in an Asian marketplace with a hand drawn map and a compass. 

laozi's picture

So you are saying that there are no expensive cars (BMW) on the street in China? That is silly. You should go and see for yourself.

Non Passaran's picture

Wow what a great observation. Send your resume to the author now!

Freight traffic is dropping because people are transporting raw materials in their Gilly's, riiiight! That also explains why some of those China made cards come with traces of asbestos.


redd_green's picture

Awesome question.   I was just there for a month in July, traveled to a few major cities.   The railroads are everywhere packed with people, and there are long lines.   There are so many people in China,  that you could give half of them cars, and ther railroads would still be very busy.    Local bus transportation is in similar shape.   We visited a town in the North of China that has gone from a handful of cars, to tens of millions of cars in about a decade.  The local busses are mostly standing room only, most of  the time around rush hours, to and from work.  They (local bus companies) definitely lost revenue, but its difficult to see since there are still so many people everywhere.