Warnings over global stability gathering are pace, with legendary fund manager George Soros comparing the climate to that of the financial crisis in 2008.
Speaking in Sri Lanka, Soros warned China is struggling to move away from export-led growth towards a more sustainable, domestic consumption-led economic model.
The billionaire investor said the People's Bank of China's decision to let the renminbi move more freely is transferring market risk to the rest of the world. Simultaneously, the developing world will have to navigate its return to positive interest rates this year.
“China has a major adjustment problem,” Soros said, according to Bloomberg news.
"When I look at the financial markets there is a serious challenge which reminds me of the crisis we had in 2008."
Global markets are being riled by concern over how quickly China's economy is slowing. Its stock markets were suspended after just 870 seconds of trading today, the second time this year, after the central bank accelerated the depreciation of the yuan.
Soro's warning comes as Chancellor George Osborne is gearing up to caution that the UK economy isn't completely immune to a darkening global backdrop. Later today, he'll highlight the risks posed by slowdowns in some of the largest emerging markets, such as Brazil, Russia and China.
The UK was one of the fastest growing of the major developed economies last year. However, one of Britain’s most respected business groups recently warned it could plunge into a new economic storm if politicians become complacent.
Today's move by China's central bank sent the country's blue-chip CSI 300 index down 7.21 per cent at 3,284.74 points. The Shanghai Composite Index shed 7.32 per cent at 3,115.89 points, while Hong Kong's Hang Seng index was 2.75 per cent lower at 20,403.90 points.
Meanwhile, Brent crude oil, the international benchmark, fell six per cent at 32.30 per barrel, its lowest level since December 2003.
And when China coughs, the rest of the world sneezes. Britain's blue-chip FTSE 100 crashed through the psychologically important 6,000 mark, slumping 2.54 per cent in mid-morning trade at 5,918.42 points. The German Dax was down 3.52 per cent at 9,850.44 points, while the French Cax shed 3.52 per cent at 9,850.44 points.