China’s second interest rate cut in three months raised suspicions that the government might be trying to devalue the yuan to unfairly boost exports, a valid concern considering Beijing’s history of exchange-rate manipulation, or resistance of upward market pressure on currency to maximize exports. In this case, Chinese leaders are appropriately responding to deflationary pressures and accepting downward pressure on the yuan due to monetary easing. As the country struggles to rein in the vast shadow-banking sector, China must also remain wary of the risks associated with quantitative easing. Despite Chinese companies owing about $1.1 trillion in dollar-demoninated debt according to the Bank for International Settlements, the country remains a net lender with more than $3.8 trillion in reserves, but if the yuan plummets there’s no telling how many of it’s companies (especially highly leveraged property developers) could default. China announced a new target of about 7% growth, the lowest in 15 years, but as much as they do, the rest of the world needs for China to make a “soft landing” from their economic slowdown. For the time being, we can expect cautious monetary easing and tolerance of exchange-rate consequences until China’s economy is once again on the rise.