The Chinese leadership is discovering that financial markets have a tendency to punish governments for doing the right thing at the wrong time. And it is not the only one dealing with the repercussions. The consequences are being felt around the world.

Just a few weeks ago, Beijing moved to make its exchange rate setting mechanism more flexible. This decision — which had been advocated to Chinese officials for years by economists and US governments — is an important step in the country’s multi-decade journey towards a truly market-based system. And, as such a large economy on the global stage, it is consistent with the country gradually assuming more of its multilateral economic governance responsibilities.

From many dimensions, this was a good policy step. The problem is that it was implemented at the wrong time.