What's happened to the renminbi?
Since the summer, investors have been keeping an uneasy eye on the value of the Chinese currency.
In August, Beijing decided to tweak its exchange rate peg with the dollar, making the renminbi float in a wider band against the greenback.
This sparked immediate market panic that China was entering into the world's currency wars.
But the devaluation in itself was small. Allaying fears further, the Chinese began to immediately intervene to prop up the RMB to stop it falling too fast by drawing down their reserves.
But devaluation fears are returning. The country's export performance has stuttered, while the dollar has rocketed on the back of a stronger US economy.
In response, on January 7, authorities set their "daily fix" against the dollar 0.51pc lower. This was the single biggest move since August and set off a new bout of mass stock market hysteria.
Overall, the RMB has weakened by around 10pc against the dollar over the last two years.
"Over half of the weakness has come in the last four months," says Sean Yokota at SEB.
"We are heading to 6.83; the level China pegged to the dollar post the global financial crisis of 2008."
Kevin Lai at Daiwa Capital expects the RMB to fall even further. He forecasts it will hit 7.50 by the end of the year.
"There is likely still to be plenty of depreciation to come," he said.
Does it really matter?
China has said it is not in the business of competitive currency devaluation.
The central bank, The People's Bank of China (PBOC), has said its main exchange rate target is against a broader basket of currencies and it's not fixated on the greenback.
The PBOC has repeated this claim again, saying that it is happy to let the yuan-to-dollar rate have a more "market determined value".
It wants to ensure that when measured against a wider basket of currencies - which includes sterling and the yen - the RMB remains "stable."
What's happened to the trade weighted value?
In worrying signs for the Politburo, the RMB's weakness is being reflected across the board - and not just against the dollar.
The chart below shows how the exchange rate against a basket of currencies has broadly tracked the dollar rate since the start of last summer.
Are the Chinese losing control?
Beijing has been intervening heavily to support its currency and latest evidence suggests it has been drawing down on its reserves on a massive scale.
The latest December figures show reserves fell by a record $108bn. Such steep falls are also evidence of worsening capital flight in the country.
Net outflows reached $140bn last month, surpassing the previous peak seen in August, says Mark Williams, at Capital Economics.
The Communist party has responded to mass capital outflows by using the full force of the state to punish those it accuses of "illegal cash transfers" out of the country.
Some claim that the Chinese are beginning to lose control over their exchange rate and their economic policy.
Burning through reserves exerts a tightening effect on the economy. This has been offset in the past by cutting interest rates. However, rate cuts only hasten capital outflows and so the vicious cycle continues.
China's exchange rate policy, it could be said, has put the country in a bind.
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