Investors got a stark reminder of how fast their bets can turn in China, where the most bullish trades are falling apart.

The country's currency was their latest favourite to succumb to a rout that has roiled financial markets around the world this week, losing as much as 1.2 per cent on Thursday for the biggest decline since the aftermath of its 2015 shock devaluation. That follows a sell-off in large caps and banks that has wiped out about $US660 billion ($848 billion) from the value of Chinese equities.

On Friday, the Shanghai Composite sank as much as 5.8 per cent on Friday, before paring some of its retreat to trade 4.1 per cent lower at 3128.25 as of 1pm local time.

The slide resulted in Chinese stocks following their US counterparts into correction territory - a fall of 10 per cent or more.