Global market spillovers from China's economic shocks will only increase in coming years as the country's financial influence grows, the International Monetary Fund said on Monday.
Slowdowns in China's economic growth and industrial output reverberated through global financial markets last year, causing prices of equities and commodities to plunge in both emerging markets and advanced economies.
In a portion of its latest Global Financial Stability Report, the IMF said markets have become extremely sensitive to the economic signals coming from China and that policymakers there must not send mixed messages.
Speaking to CNBC, Gaston Gelos, Chief of the Global Financial Stability Division, said that "as China's role in the world economy continues to grow, news about its growth and its economic development will affect also other markets."
Markets will be increasingly influenced by the sheer size of China's economy, more financial linkages, such as the listing of Chinese companies on international stock markets and the growth of the yuan's use in international transactions.
"China is undergoing an important transition from an industry- and investment-based economy model to a more service-oriented, consumption-based model and that's important, and that's a good thing," Gelos told CNBC.
"But that transition, of course, has many challenges and one important aspect is that the policy measures that are being taken in this context are being communicated clearly and in a timely manner so as to avoid excessive volatility elsewhere."