The 8 Most Important Charts In China

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People play chess in front of an electronic board showing stock information at a brokerage house in Hefei, Anhui province, February 18, 2013.

China is the second largest economy in the world, and it is one of the fastest growing ones as well.

It is also an incredibly dynamic and complicated economy with many moving parts.

We recently got more evidence that suggests China's economy is decelerating.  Indeed, concerns are piling up as interest rates rise and its super hot housing market begins to cool.

Morgan Stanley's Asia Pacific research team led by Martin Yule recently published its massive 72-page China Pulse Chartbook.

As we all keep a close eye on China, Yule's team offers "Eight Charts To Remember."

1. SHIBOR: This is the LIBOR of China. Some pundits have noted that LIBOR spiked before Lehman Brothers went bankrupt in 2008.

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2. The Hong Kong stock market: Stock markets in the area have become extremely volatile, reflecting the shifting expectations of investors.

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3. MSCI China Index: With the economy slowing, earnings growth expectations have also been coming down.

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4. Loans: Lending activity is perhaps the most reliable and crucial leading indicator of economic activity in the country.

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5. Steel Mill Output: This is closely tied to the buildout of China's infrastructure.

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6. Housing Starts: Building remains high as the standard of living improves.  However, overbuilding and too much leverage are lingering concerns.

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7. Retail Sales: As the country shifts from being an investment-driven economy to being a consumption-driven economy, retail sales should continue to grow rapidly.

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8. Rail Freight: Everywhere in the world, transportation companies are considered reliable bellwethers of economic activity. In China, it debunks or confirms other economic reports, which may be less reliable.

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