China Can Afford To Depreciate Its Currency, But It Does Not Bode Well.

China no longer keeps the renminbi pegged to the US dollar.

After the "8.11" new exchange rate reform, the daily middle price has closely followed the closing price of the previous day, but since the end of last year, the central parity of RMB has more reflected the basket index.

Despite the fact that traditional growth engines such as manufacturing are underpowered and cut interest rates and the effect of fiscal stimulus are limited, China also has new growth engines to provide momentum for its continued economic recovery.

For other emerging markets, the space to cope with the volatility and chaos caused by China's policies is limited.

Smaller developing economies are struggling to cope with China's decision to devalue the renminbi. Mexico has warned against the risk of competitive devaluation, and Thailand says its exports will be affected.

Last month, the governor of the Indonesian central bank, which said there was room for cutting interest rates, said that stability was being set.

Priorities and monitoring the global situation.

"In the past, if you close your eyes, do you know if the renminbi is stable or is it?

Things are quite different now, "said Wellian Wiranto, an economist at OCBC Singapore.

"In the past, the mentality of emerging markets was to take China as a customer.

Now China is becoming a competitor.

And it is still exporting volatility. "

"Emerging markets are not immune to China's situation," Morgan chase Singapore.

Jonathan Cavenagh, head of monetary strategy in emerging markets, said.

"The most important part of China for most other emerging economies is still rather weak. Under the background of the depreciation of the exchange rate, it will put pressure on other places' confidence."