The Chinese policymakers did not see it coming. Market turbulence has ensued since the People's Bank of China announced its exchange rate reform on 11 August 2015. To date, the renminbi has fallen by nearly 5% against the US dollar. China's foreign exchange reserves, once thought to be a formidable war chest, shrank by US$420 billion in just six months to US$3.2 trillion by end-January. Accelerating capital outflow sparked concerns about a looming financial crisis. China now faces the classic trilemma – it cannot control its exchange rate, have an independent monetary policy and allow free capital movements all at the same time. The path to reform was never going to be easy. What can we expect from China's policymakers next, and will the renminbi devalue sharply again?