The mood in the Chinese markets has been very upbeat since about mid-July, with stocks that make up the iShares FTSE/Xinhua China 25 Index (FXI) breaking out above their 50- and 200-day moving averages. But this week, the fate of Chinese stocks has been decidedly lower, and one key reason is the latest batch of downbeat economic data.

According to government reports, China’s imports grew less than expected last month, with imports climbing 22.7% to $116.8 billion in July. That’s certainly not bad growth, but it was well below consensus forecasts for 30% growth. The report comes on the heels of June’s softening imports, which showed the smallest gains since growth resumed in November 2009.

There also was downbeat news on both the industrial output and inflation fronts in China.

China’s annual industrial output growth in July slowed to 13.4% from 13.7% in June, according to the National Bureau of Statistics. Meanwhile, China’s headline inflation accelerated to 3.3% in July from 2.9% in June.

I suspect that fears of a China slowdown also are weighing down both international and U.S. markets today, and while I don’t think China’s economy is in danger of a serious decline, the latest numbers certainly point to some challenges ahead for China and its equity markets.

Unfortunately for global equity investors, those challenges aren’t likely to remain solely within China’s borders.