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China Currency Crisis May Get a Sequel

China’s equity market has plummeted, capital outflows have accelerated, and its teetering real-estate sector is struggling with unwieldy debts. Meanwhile the Federal Reserve has begun hiking rates. The yuan is down 5% against the dollar since late April.

For those with long memories, all of this calls to mind the most turbulent time in Chinese financial markets over the past decade: In 2015 and 2016 the yuan lost around 10% of its value, China’s foreign-exchange reserves fell by nearly a trillion dollars, and the country narrowly avoided a real-estate and industrial debt crisis.