China real GDP likely contracted by 1.7%

China is already exporting deflation to Japan in the sense that the Japanese PPI for domestic consumer goods has trended down with the Chinese PPI. Price cutting by Chinese exporters could exacerbate this effect. This, in turn, could weigh on downstream prices of consumer goods. 

Braclays's estimation indicates, China's real Q2 GDP contracted by 1.7% q/q saar, reflecting a downturn in private consumption (-0.4% q/q) and an ongoing drag from net exports (-0.3pp). The risks to the assumption for private consumption may be skewed to the downside based on the Cabinet Office's composite index of consumption, which points to a 0.6% q/q decline.