Chinese economy is seen as a crucial source for global economic growth. Growing concerns over the economy will hurt investor sentiments as they will be wary on volatility in financial market conditions and challenges concerning capital flow management. China's capital outflows are estimated to have amounted to 680 billion USD in 2015, while one-third of it is being unrecorded outflows.

The Chinese government will have to manage the pressure on the capital account, while at the same time focus on capital flow liberalization, which requires continuous official intervention. With the country's economy posting 6.8% y/y growth in the final quarter of 2015, the annual output rose to 6.9%.

"We expect that real GDP growth will continue to decelerate to 6.4% this year and 6.2% in 2017. However, monetary and fiscal stimulus will support output in the months ahead." Says Scotiabank in a research note