Anbound's chief researcher, Chan Kung is of the view that the recent adjustments to the exchange rate formation mechanism will give rise to the following impacts: -

(i)RMB might not be stabilized at all;

(ii)The possibly limited impact on China’s manufacturing sector;

(iii)It is highly possible that there might be tax rise after the devaluation of RMB ;

(iv)The internationalization of RMB could be affected greatly;

(v)Overseas investment and tourism will be affected;

(vi)The implementation of the Belt and Road initiative will be affected; and

(vii)The USD-denominated debt for Chinese enterprises will increase.

It is highly likely that the central bank has under-estimated the impacts brought by RMB devaluation.