Chinese trade data earlier this week showed imports growth falling deeper into negative territory (-2.1% YoY), while credit data due in the coming days is expected to show the earlier sharp increase in loan extension coming to an end. And unlike elsewhere in EM, August inflation data dropped back, partly due to lower food prices (2.4% YoY versus 2.7% in July) and core inflation has been weak (unchanged versus July at 0.5% YoY).

While China’s headline GDP may well be propped up by the strong export performance, growing weakness in China’s domestic economy suggest that any ability to boost China-centric markets is limited. The import bill has undoubtedly benefited from lower commodity prices but this does not fully explain the very weak number as China’s manufacturing surplus also increased over recent months. With export growth running well above global aggregates China is also increasing its share of global trade.