China FX reserves of $3.65trln to support Chinese Yuan

The August Caixin mfg PMI fell to 47.3 the lowest since March 2009, stoking fresh investor fears of a hard economic landing. The 40% drop in the Shanghai composite since June has sparked a global market malaise.  The PBoC devalued the CNY on 11 August and changed the FX regime (fixing now based on previous day USD/CNY close). 

After cutting interest rates and weakening the currency, will fiscal stimulus follow to keep growth on track of 7% this year? USD/CNY forecast revised up to 6.80 (Q4 15).  The PBoC last month cut the RRR by 50bp to 18% and the lending and deposit rates by 25bp to 4.60% and 1.75% respectively. 

"According to our economists, this will not be enough; they expect further policy easing", says Societe Generale.