Christine Lagarde tells China it has a ‘communication issue’ as Chinese stocks continue to slide

The Shanghai Composite Index closed down 3.2 per cent

Christine Lagarde, managing director of the International Monetary Fund (Getty Images)

Chinese stocks ended the trading session lower on Thursday after showing promising gains in early trading.

The Shanghai Composite Index closed down 3.2 per cent after a volatile day, adding to a decline of 18 per cent in 2016 alone off the back of falling oil prices, down to lows not seen since mid-2003.

The losses came despite a shot in the arm from the People’s Bank of China, which attempted to shore up liquidity in the system by injecting more cash.

China has "communication issue" that unsettles markets, Christine Lagarde says https://t.co/fEqSrXRdub #WEF16 #Davos https://t.co/uSTQ60z9Is

— Bloomberg Business (@business) January 21, 2016

As Asian markets closed, Christine Lagarde, managing director of the International Monetary Fund, took to the stage at Davos to discuss where China is heading.

She said that China had one big problem: communication. “There is a communication issue, which is something markets don’t like,” Lagarde said.

China Sec Reg Vice chair Fang says market is getting more complex but we have enough smart people to run it. #WEF16 pic.twitter.com/Id3kAQn08d

— Holger Zschaepitz (@Schuldensuehner) January 21, 2016

Largarde said that China was going through several economic transitions, from industry to service, export to consumption and also a governance change relating to anti-corruption.

“Better and more communication would serve that transition better,” she said.

The FTSE 100 opened up 0.8 per cent on Thursday after slipping into bear-market territory on Wednesday, defined as a sustained fall of over 20 per cent on stock market indices.

But the rally was short lived. An hour aftert opening, the FTSE 100 had slid 0.2 per cent lower, marking the start of another volatile day.