The change in momentum seen in China in July has now become apparent in all the Q3 data, with GDP up 7.8%YoY. Industrial production data were also decent, while housing market activity continues to grow at a decent clip.
So what are the risks now? With the developed world picking up pace, its unlikely to be an external shock. To be sure, the weakness in Chinese export markets this year was one of the key reasons policymakers looked to put their foot back on the pedal in order to keep things from slowing too much.
The biggest risk now appears to be a return to the changed policy approach seen in the first half of this year. It became clear at the start of last year that the new government were no longer just trading the risks between growth and inflation, but financial excesses were becoming a more important part of the equation.
This change in view culminated in the SHIBOR squeeze mid-year, which perhaps was a step too far, with infrastructure spending subsequently rising and credit growth strengthening in the following months.
But it would be a mistake to believe that the current bounce in activity will continue all the way through 2014. With the risks of export weakness reduced, it seems likely that policymakers will have increased resolve to try and correct some of the imbalances in the drivers of growth and the ongoing flood of credit.
To some degree, this is what the consensus of forecasters are looking for, with 2014 GDP lower than this year despite the recent uptick in momentum.
But while it maybe it some peoples GDP numbers, the shock of negative policy action is not noticeably priced into many markets or commodities.
In particular, a commodity like copper has been pretty range bound in the last few months, although its become clearer that next year the surplus is likely to be pretty big. LME copper stocks have been coming down in the last few weeks although remain high. Of concern is that SHFE stocks have risen almost as much as LME stocks have fallen, suggesting little consumption of inventory.
With the fundamentals deteriorating, it seems likely that it will be more sensitive to changes in the outlook for Chinese activity. Most analysts are already bearish on copper, but unexpected policy announcements may make everything happen a lot quicker than forecast.
A commodity like iron ore will probably not react immediately to policy announcements, given spot prices are mostly a function of buying interest from small Chinese steel mills, who react more to their order books than headlines. But a change in the profile of growth can't be good for steel and raw materials either.
