China is a decade behind in terms of its interest rate policy, and this makes it difficult for them to implement changes now, said Frasier Howie, managing director of CLSA Singapore, on CNBC this week.
"They really should have taken action when they entered the World Trade Organization (WTO) in terms of their currency, and that would have taken some of the excesses of the bubble you've seen in the last ten years," he said.
Howie said that China will take time to resolve some of these issues, partly because "the global environment is much much tougher."
The Shanghai Composite fell 4 percent on Tuesday, on lingering worries over more official steps to cool a liquidity-driven asset price rally. The benchmark index plunged 5 percent last Friday, its biggest single-day fall in 14 months.
Howie expects the Chinese yuan's exchange rate to continue to fall, possibly to 6.60 yuan versus the U.S. dollar, but he believes China's de-facto central bank, the People's Bank of China, is unlikely to implement any draconian measures.
"I think it's going to be more reserve requirement hikes, it's going to be more clamping down on second, third homes...things that we've seen..over the past two or three years."