As we have long expected, China is beginning to decelerate. Recent data releases have suggested that the country's economy is undergoing a rapid and traumatic rebalancing as policymakers steer away from resource-intensive investment and infrastructure activities and toward a more sustainable consumption-driven model.

With the flow of government-created credit into the economy slowing, China's appetites are changing - forcing Western perceptions to change in the process.

As the China put expires, commodity prices are weakening and the global growth map is being redrawn. Resource-based economies like Australia's are coming under pressure, contributing to a reversal in performance characteristics across a number of the resource-linked currencies.

The wider repercussions are difficult to foretell, but a narrowing in growth differentials between the mature, industrialized economies and their emerging brethren is already making itself felt in the currency markets. Capital flows are shifting direction, largely favouring North American market, but also helping to stem the euro's fall, as the alternatives look less than attractive.

China's rebalancing is designed to occur over a long time span, and will continue to affect the markets for years to come.

However, June is likely to bring complexity to the narrative, with policymakers announcing a number of measures designed to slow the economy's descent and soften its landing.

For the financial markets, China is no longer a simple story - and market participants should remain wary of risks on both sides of the narrative.

International