It was predictable that China would lower currency to stimulate...

It was predictable that China would lower currency to stimulate the economy, but this is perceived as a sovereign investment risk. I believe this triggered the Chinese market sell off. Investment banks cant afford to loose 50% of capital in the market.

In summary they are in a finance trap. They need a lower currency and the market is full of foreign investment which will panic if they lower the currency.

Secondly China needs to raise GDP because their debt to GDP is 250% and they are losing market share to more competitive countries. They are in a no win situation.

If they don't lower their currency they will be uncompetitive and lose more market share. If they do they will have a stock market crash and lose foreign investment. They are painted into a corner.