This is what happened in China that sent the global markets sliding

BEIJING, CHINA – DECEMBER 9: Chinese migrant workers talk after their shift at a construction site on December 9, 2014 in Beijing, China. It is estimated that there are more than 40 million construction laborers in China, many of whom come from smaller centers to the country’s larger cities to find work. (Photo by Kevin Frayer/Getty Images)

Global markets are reacting negatively to a falling yuan and volatile stock market in China again, continuing what seems to be a new normal in the first two weeks of 2016.

Here’s what went down.

Remember that there are two different Chinese currencies — the onshore yuan (CNY) and the offshore yuan (CNH).

Increasingly, the Chinese government has been buying the onshore yuan in order to keep it from falling too fast.

It wants the yuan to weaken to help boost exports as the country’s economy slows. However, it also wants to maintain the yuan’s stability, and in December spent $108 billion to do so.

The offshore yuan, is a different story, though. It floats more freely, and even though the Chinese government can direct big state banks to buy offshore yuan, as they were doing on Wednesday, according to the Wall Street Journal, it is more reflective of market sentiment.

On Thursday night, while Americans were sleeping, the spread between the onshore yuan and the offshore yuan widened.

The offshore yuan started to fall in early trading. The onshore yuan, which has been propped up by the People’s Bank of China (PBOC) all week, started to fall too.

That sent Chinese stocks wobbling up and down at the open, and the rest is the beginning of what seems to be another global market rout.

We’ve been watching the yuan lead markets down since the beginning of 2016. Last week an intentional 0.25% depreciation of the onshore yuan sent markets sliding all over the world.

On Thursday, the offshore yuan fell as much as 0.7% against the dollar before stabilizing to down around 0.5%. The onshore yuan fell about 0.2%.

Welcome to a new normal?

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