With economists across Wall Street having downgraded their China outlook to stabilisation rather than a recovery, the weakness in the August data is no real surprise. Both the NBS and HSBC August PMIs declined counter-seasonally, while the increase in industrial production of 8.9% y/y (consensus: 9%) compared to July's 9.2% increase showed that little progress has been made in improving the underlying momentum of the economy. The August NBS manufacturing PMI fell to a nine month low of 49.2 (Consensus: 50), from 50.1 in July, as did the HSBC PMI to 47.6. Moreover, the slowdown in NBS PMI was broad-based. Meanwhile, countering the recent trend, domestic inflation picked up to 2%, compared to July 1.8%, with food the key contributor, making any aggressive stimulus measure less likely, in our view.