The deflationary impact of China on world markets is now turning into an inflationary red flag with important implications for China ETFs like iShares MSCI China (FXI).

Wages have started rising rapidly, energy prices remain high and food demand is exploding. Fresh evidence emerged in February as China’s National Bureau of Statistics said that inflation jumped to 7.1% percent from 6.5% in December. The Chinese stock market today took a hard fall today of -4.11% and on concern about U.S. demand after last Friday's weak US payroll report.