1. China's Central Bank Backs Down and Starts Injecting Liquidity The first and maybe most important development from China was the rather quick backing down of the People's Bank of China (PBoC) to its campaign to try and stomp out over aggressive bank lending (including the shadow banking system). This caused quite the stir a month ago, and the Shanghai index plummeted 15% as a result. The main idea being that Chinese banks have been trained to expect the PBoC to inject liquidity into the market (cash to banks) whenever that liquidity looked to be running dry. This meant that banks could lend freely and in general not do overt due diligence about who they were lending to. Well, with the economy sputtering of late, the State Council said this just wont do (and that the economy needed to meet the 7.5% growth target). And so the PBoC has reverted to its old ways, and resumed injections of liquidity via its biweekly open market operations. "LlDjuQkF" />The Shanghai index has responded by climbing 5% from its lows.3. Politburo's Mini-StimulusWhile the PBoC's carry more weight with market participants, there were some other efforts undertaken by officials to help spur growth on the margins.From Bloomberg:The Politburo pledged last week to stabilize growth while pressing on with economic reforms. China has announced what Bank of America Corp. called a “small stimulus” consisting of measures including tax breaks for small companies and accelerated railway construction while cutting industrial overcapacity and extravagant spending by officials and state-owned enterprises. 3. China's Trade Balance Shows a Jump in Imports (and Exports)With many worrying eyes now focused on the growth pace in China, it was a relief to many to see the Chinese trade data from last night as it showed both exports and imports improve.Exports rose 5.1% y/y in June after falling 3.1% in June.Imports jumped 10.9% y/y after falling 0.7% in June.Iron ore imports were at their highest level this year (And a loud cheer was heard in in the corporate offices of Aussie mining companies). Here's a typical news report on the release: The Takeaway - Fears Around China Recede Somewhat The takeaway is this. A month ago, there was uber concern that the PBoC was starving the banking system of liquidity in a bid to get banks to de-leverage, and there was real concern that growth would falter below the 7% level. This weighed heavily on those currencies and economies (cough, Australia, South Kore, cough) that rely on the behemoth that is Chinese demand. Now, those clouds have lifted somewhat and it has meant a sigh of relief. It's not a coincidence that the AUD has managed to find some support of late despite a rate cut and poor employment figures. - Nick