If the US dollar remains firm, then flows looking for an appreciation of the yuan will remain at their 2005 levels or lower and we're forecasting a more or less unchanged trade surplus.
Both were in recession last year and the recoveries there have not been particularly strong yet.
The rating agency actions have reinforced a message to investors that fiscal consolidation in both countries is a trend and will drive asset prices higher. So markets are reacting to this.
There's been very strong growth balanced between domestic demand and exports and falling inflation - a very satisfactory outcome from the point of view, I would suspect, of the policy-maker.
Chinese producers will remain competitive in a wide range of manufactured products for some time.
China's trade surplus has become a structural feature of the economy, so while political pressure may grow, the economic argument for a stronger yuan is weak.
Investors are conditioned to see politics-induced pricing weakness as a buying opportunity and our base case is that this time will prove no different. Still, this is shaping up as an exciting week.
While the economy is booming, the slowdown in investment growth must be seen as a welcome sign.
Strong new orders is a good sign for the region. The improving job situation means wage increases and that should support stronger consumption.
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