As the consequences of China's shock decision to slash the value of its currency begin to filter through, Australia could be a winner from a more competitive China, if it can withstand the short-term pain, economists say. 
AMP Capital chief economist Shane Oliver said following any major currency adjustment, the initial effects are negative, but that "eventually you get a positive effect coming through - it just depends on your starting point". 
St George chief economist Hans Kunnen agreed the benefits from the currency devaluation, along with other stimulatory measures such as rate cuts, would flow through to Australia in the medium term.
China will have to pay more for its imports, but an increase in their now more competitive exports would help stimulate the world's second largest economy, Mr Kunnen said.
"We would see the benefits initially in the Chinese figures: stronger property demand and stronger steel output," Mr Kunnen said. "It should then come through in Australian exports, we would see it in greater demand for iron ore and gas."
The short-term pain would be felt in Australia's manufacturing sector, which faced more intense competition from now cheaper Chinese-made goods, and exports, which would become less desirable as they become more expensive.
Meanwhile, there are worries that a weaker yuan would have a global disinflationary effect and potentially delay the much-anticipated interest rate rise in the United States. The odds of a rate hike next month in the US currently sit just short of 50-50, according to market pricing in the bond markets.
Any such delay could add upwards pressure on the Australian dollar and make the Australian economy more vulnerable to China's weakness in the short term, UBS economist George Tharenou said.
"[That] could pressure the RBA to ease again," Mr Tharenou said. 
But Dr Oliver said the Reserve Bank of Australia would be keenly aware of the ambiguities around the longer term effects and avoid knee jerk reactions, particularly with   September's Federal Reserve meeting looming. 
So what evidence will flag that the tide is turning towards a more economically stable China that will eventually flow into Australia?   

The Australian dollar
Mr Kunnen said foreign exchange traders always looked far ahead, and movements in currencies were indicators of long term economic health.
"Look for a slightly firmer Australian dollar to gauge if the devaluation stimulates growth in China," he said.

Oil and Copper prices
"If oil and copper continue to slide away the Australian dollar is still incredibly vulnerable," Dr Oliver said. 
"China is the world's biggest oil importer, and we've been in a glut over the last year or so; the world has produced 3 million barrels a day, but the demand is only 1.5 million barrels."
Copper, is considered a bellwether of global demand for commodities, he said. Both oil and copper slumped to six-year lows last week in reaction to the devaluation.
As for iron ore, Goldman Sachs commodity researchers Christian Lelong and Amber Cai said iron ore prices have shrugged off the yuan devaluation, and even managed to rise, as a result of low Chinese inventory levels and potential supply problems following the explosions in the major port of Tianjin.
But iron ore has bigger longer-term problems, with the Goldman Sachs analysts tipping a 30 per cent slump in price in the coming 18 months on increasing supply and a weaker steel outlook.
Coal would come under pressure as China is both a major importer and exporter of the commodity, effectively setting the global price. 
"The rest of the world relies on Chinese imports to balance the seaborne market, and imported coal must be priced competitively against domestic coal," they said. 

European markets
Dr Oliver said Europe was China's biggest export market and China imported a high level of luxury goods from Europe, so would be a good indicator of the effect on companies with high exposure to China.
"European markets were hit hard last week, and are worth keeping an eye on in terms of the impact of higher import costs," he said.

Export data
Export volumes from China are still negative, Dr Oliver says, so any signs of growth will indicate a turnaround. 
In   July the nation's exports slumped 8 per cent, much worse than an expected 1 per cent fall, leading many analysts to make a connection between the weak data and the devaluation.