Christine Lagarde (3)

The head of the International Monetary Fund (IMF) Christine Lagarde has warned the Chinese government that it needs to improve communication with financial markets.

"Given the massive transition in China, there is a communication issue - that is something that markets do not like," Ms Lagarde said at the World Economic Forum in Davos.

Chinese shares have suffered huge losses in the opening weeks of 2016 as they become increasingly concerned over the state of growth in the economy, which fell to its slowest pace in 25 years in 2015.

The IMF boss said that "uncertainty, not knowing exactly what the policy is. Not knowing exactly what the renmimmi is valued against - the dollar, or a basket of currencies" is spooking investors.

Many of the losses seen by markets in China were came after the country's central bank lowered the value of the yuan against foreign currencies. Following Ms Lagarde's comments, it appears there is not a communication line between government policy and investors.

The efforts to weaken the yuan are designed to boost exports by making it cheaper for other countries to purchase Chinese goods. But the government is in the middle of a major transition in the country's economic focus. Much of its rapid growth over the past quarter of a century has been driven by manufacturing and exports - but the government now wants to move the economy towards services and consumer spending.

Despite her concerns over communication with markets, Christine Lagarde said that this economic transition should be "perfectly manageable" with the right policies in place.