How will the US react?
The devaluation could prompt an angry reaction from the US, which has consistently argued that the yuan is undervalued, damaging US exports. It could also force other Asian countries to devalue, making exports to the US cheaper and increasing Washington’s trade deficit further.
Will China export more than just cheaper goods and services?
Central banks in the US and the UK are toying with raising interest rates to combat the prospect of higher inflation. But cheaper Chinese goods will reduce inflationary pressures and keep interest rates lower for longer. Less welcome will be the export of unemployment, as Beijing effectively prices western workers out of a job to protect its own economy.