Maybe it is Not a Financial Crisis in China

Current vulnerable volatility in the global markets started from weakening CNY by PBOC. News argued this could restrict exports sector in other countries such as EM Asia due to negative effect of weak renminbi. But, I don't think current devaluation of CNY aims to boost Chinese exports sector by weakening real effective exchange rate. But, China is on the process to muddle their external debt through to give an incentive to go out Chinese domestic shadow banking market slowly following last year's devaluation of renminbi.

In this point, the main problem and concern would be how much needed deleveraging position is in Chinese domestic companies and whether Chinese government could handle them or not. If the amount of needed deleveraging position additionally is too big to handle, it must be in a financial crisis in China. And if then, because this crisis is from the liquidity problem, banking system should be much more vulnerable, so the inter-bank market interest rate should soar much higher.

But, see the inter-bank market interest rates... Below picture is 5 year Chinese government bond yield. This yield soared rapidly in the early stage of weakening CNY, but it turned to be lower rapidly from then... it is maybe not a financial crisis in China...