Iran's threat of "economic warfare" against the United States this week ran through the Strait of Hormuz. The PBOC's open-market desk watches a narrower channel: the price of Brent when Chinese refiners settle their October term contracts, since Sinopec and PetroChina carry roughly half their crude on long-term deals priced off a basket that moves when Gulf shipping risk repricing hits the spot benchmark, and a sustained move above 90 dollars a barrel forces the State Administration of Foreign Exchange to choose between defending the yuan's crawl against the dollar or letting import costs pass through to a producer price index that has been negative for three straight quarters.

The August financing, a follow-on to the 360 billion yuan tobacco-funded package the finance ministry ran through China Reinsurance and the big state lenders last week, or, more precisely, the mechanism the ministry is now testing is whether it can route a second tranche through the National Council for Social Security Fund without booking it as new sovereign debt, matters because SAFE's reserve managers hold roughly 3.3 trillion dollars in mostly dollar assets that would normally absorb an oil-price shock through valuation gains. If Beijing needs the social security fund's balance sheet to backstop banks at the same moment Hormuz risk pushes import costs up, the PBOC's foreign currency desk has until the September MLF rollover to decide whether reserve deployment defends the yuan or subsidizes the rescue. It cannot fund both from the same account.