Households spending more, RMB gains to continue

Consumer spending continued to strengthen during the Golden Week holiday, helping to dispel some concerns about the lopsided nature of China’s recovery and providing a further tailwind today to the renminbi. We expect the currency to continue strengthening. Meanwhile, there was further evidence of the rising global antipathy towards China that we think will ultimately lead to decoupling. In the near-term though, the opposite is happening: China’s exporters are significantly increasing their global market share. Data due in the coming week are likely to show that exports are rising at a double-digit rate year-on-year.