*Gabriel Weldau from Shanghai
The turbulence returned to the Chinese financial markets after more than two years of relative tranquility, that push in reviving the memories of 2015-2016, when the fall in the stock market and devaluation attracted the attention of global investors and raised concerns about systemic risk.
So far, the market declines have not reached the 2015 level, when the Shanghai Composite Index fell more than 45 percent over two months between June and August, while the Renminbi dropped 10 percent between August 2015 and the end 2016.
The moves have prompted significant intervention by authorities in both markets.
The use of foreign exchange reserves to support the Renminbi is generally seen as a successful effort - albeit costly - to stabilize market expectations. However, the stock market rescue plan is widely seen as a failure.
In August 2015, an internal assessment of the effort concluded that the so-called "national team" of state-backed investors should abandon its own rescue efforts.
"It's perfectly normal to think about 2015 at the moment, but the government should have learned some lessons from that incident that was not fun," said Shuang Deng, an economist at Standard Chartered Bank in Hong Kong.
"At the time, the government was in a state of panic even before the market felt, it had intervened excessively, which was creating unrealistic expectations among investors," he added, "This time they were generally on the sidelines and allowed the market to interact with slower economic growth and the possibility of a war trade."
In some ways, Chinese policymakers are in a position to face the recent storm more strongly than in 2015-2016.
First of all, the stock valuations are now more modest. Although, Shanghai shares rose steadily after falling in January 2016.
However, the so-called "stock A" was still only 17 times higher that the previous 12-month period, when the benchmark Shanghai Composite Index closed at its highest level in two years in late January this year.
According to Wind Info, this was well below the 24.6 percent at the height of the bubble in June 2015.
By Friday's close, Shanghai's share-to-earnings ratio fell to 12.5, down from 12.9 when the Shanghai Composite hit the bottom in January 2016, prompting some analysts to find a chance to buy.
"This type of decline has an irrational element," said Lin Longping, chief strategist at Guotai Junan Securities in Shenzhen, "Ratings are now at low points historically. If people put their eyes on the long term, there is real investment value at this level."
With regard to the Renminbi, there is still little mention of outbreaks of capital flight of the type occurring in 2015-2016, which prompted authorities to crack down on mergers and acquisitions of foreign companies and other overseas flow channels.
Instead, the recent declines appear to be largely driven by a state of pessimism from the slowdown of the economy, along with concerns about the repercussions of the trade war on China's trade surplus.
Adding to these pressures is that the Federal Reserve raises interest rates entirely while monetary easing works to push the Renminbi interest rates down.
The result is a narrowing of the gap between the dollar and Renminbi interest rates, after years of higher returns on Chinese assets have provided a basic line to support the Renminbi.
Traders saw signs last week, when the People's Bank of China intervened humbly to curb the decline in the Renminbi exchange rate, but the bank now has less ammunition to intervene on a large scale.
The sale of the dollar in 2015-2016 reduced the pile of holdings from an all-time high of $ 4 trillion in mid-2016, to $ 3.12 trillion by the end of May (this year).
"If there is more pressure on the exchange rate, I do not rule out intervention in the market by selling the dollar," Ding said, "But they certainly do not want the foreign exchange reserves to fall below $ 3 trillion."
There is less space to tighten capital controls, especially as this would jeopardize policymakers' efforts to attract more foreign investment to local capital markets.
This trend has been accompanied by a number of moves to include Chinese stocks and bonds in global indices, but any move to curb outflows will be seen as an embarrassing reversal.
The worrisome element in both the stock market and the exchange market in China is the real estate sector.
Many worry that the sector is now in a more severe bubble than in 2015.
The index of real estate companies listed in Shanghai fell 16 percent in the past two weeks, compared with the Shanghai Composite Index down 5 percent.
News shows that the China Development Bank was backing away from a homebuyers support program that has led to a dangerous rise in sales and price growth in small cities since 2016 that has sparked a recent downturn in property developers, which was highlighting the nervous mood in the market.
While only a few people predict an outright collapse in the real estate market, a 10 per cent fall in the price will cause a shakeup in the Chinese economy, as the real estate supports demand for manufacturing, debt guarantees and local government budgets.
"The real estate bubble is quite tangible," said Hao Hong, head of research at Bocom International in Hong Kong, "Prices have doubled since the beginning of 2016 across third and fourth tier cities."
"We are now likely to be in a much bigger bubble than in 2015, constraining government policy options. Monetary policy cannot be too loose, because this will inflate the bubble more than before," he added.
