There are two sides to this story

China, it seems, is rattling a few cages in the financial markets, first of all with its interventionist moves to shore up plunging domestic stock markets.

Then on Aug 11 came the big hammer blow - China devalued, or if you prefer, depreciated, the renminbi, allowing the currency to fall in a series of moves that saw it record its biggest fall in two decades.

China's moves reverberated through the world's markets, and had the immediate effect of dragging down regional currencies such as the Australian dollar, the Japanese yen and the Singapore dollar. In the US, Republican politicians immediately complained, saying the move put undue pressure on the US dollar and crying "unfair" when they realized one effect would be to give US exports a bigger mountain to climb.

The moves, in three days, will undoubtedly make Chinese exports more competitive, and there may well be more to come.

But that's only half the story.

China is eager to have the renminbi included in the International Monetary Fund's basket of currencies that make up SDRs, or Special Drawing Rights.

Currently that basket consists of Britain's pound sterling, the euro, the US dollar and the Japanese yen. Joining that elite club would, many feel, cement China's position as a global economic power.

But entry, like any exclusive club, comes with a price tag.

The IMF, which is due to evaluate the SDR currencies, and by definition China's proposed membership, has made it quite clear it wants the renminbi exchange rate to be more driven by market forces.

Until around 2005, the People's Bank of China pegged the renminbi against the US dollar, then subsequently allowed it to float against a basket of currencies within a defined band.

Starting this week, the PBOC has, in its daily fixing of the mid point in the band, set it lower, reflecting pressure from market forces - which goes a long way to meeting those pesky IMF criteria.

You'd have thought the markets would have seen this coming, but they didn't. Shock and amazement, mixed with a little consternation, greeted the move, which most commentators in the other parts of the world tagged a devaluation.

The London Times gave it a cautious welcome, while the Financial Times said it raised the specter of currency wars as the world's economic powers battled to preserve their positions. It also warned of a deflationary effect.

The PBOC has said the renminbi will be allowed to trade 2 percent either way in a fixed band. The central bank, in its daily fixing, has for the three days since Aug 11, been setting the midpoint rate lower, at the bottom end of the band.

So, as the saying goes amongst London's Cockneys, you pays your money and you takes your choice.

The author is the Managing Editor of China Daily Europe.

(China Daily European Weekly 08/14/2015 page3)