Last week, world stock markets staged a brief rally on hopes from China. This week, they have rallied in spite of China.

The welter of new information from Beijing this week is hard to interpret; year-on-year comparisons are tricky thanks to the Chinese new year. But in essence, we have learnt that China now has deflation; that its stimulus package, announced in November, has prompted huge domestic investment; and that both imports and exports have fallen by a quarter over the last year, bringing down the trade deficit.

Stocks in China itself have sold off, with the Shanghai Composite now down about 10 per cent from its recent high. Logic suggests that the fall in the Chinese surplus might help redress global imbalances (excessive Chinese savings combined with excessive US debts). But by reducing China's demand for US securities, it might make it harder for the US to fund its deficit.