NEW DELHI: The Chinese share market collapsed about 8 per cent on Monday, after the manufacturing purchasing managers’ index (PMI) showed a contraction in the world’s second largest economy, setting the tone for the rest of the year.The A-share Shanghai Composite tumbled 6.85 per cent to 3,296.26 while the Shenzen Composite Index slumped 8.22 per cent to 2,119.157 before the authorities suspended trade for the rest of the day.The sudden collapse of the equity market was reminiscent of the historic Black Monday of August 24, 2015, when an 8.5 per cent slump in China’s equity benchmark had sent shivers down the spine of global equity markets.The equity crash in China raised fears of further devaluation of the yuan by up to 4-5 per cent.“I think a slight depreciation of the currency, probably on a 4-5 per cent, is very much possible going forward,” warned Paul Schulte, CEO & Chairman, Schulte Research.The yuan, which is set to be included in the IMF’s special drawing rights (SDR) basket, has seen a 4.88 per cent drop in value in 2015.“In terms of currency movement, China will continue to hold its way. In fact, the market believes even this year there could be further aggressive depreciation of the yuan by China in order to propel its exports and that could create a certain amount of turbulence in the markets,” said Madan Sabnavis, Chief Economist, CARE Ratings.“If you are looking in terms of the currency, what China is trying to do is push its exports in order to propel growth, because growth has come below 7 per cent, and it does not really look likely that it could be propelled internally. So as it keeps trying to push up exports, there would be a tendency to allow the yuan to depreciate and that is where the repercussions would really come for the global economy,” he said.China’s GDP growth rate slumped below the crucial 7 per cent level in the third quarter of the year, signalling the end of two decades of double-digit growth, which propelled the world’s most populous country to a superpower status in the global economic order.Fears of a further slowdown have returned to haunt markets after two straight months of gain in the manufacturing PMI.Add to this the threat of a weakening yuan or renminbi, which is heading towards its five-year low against the US dollar, and you start getting a hang of why investors are running for the exit door.In the aftermath of the financial crisis of 2008-09, China stood tall to carry the world on its shoulders. With the global economic outlook muted this year, China's slowdown is an extremely worrying sign for the world economy.“The difference between 2008 and 2015-2016 is that at that time the recovery was driven by Chinese demand. China was growing at 10-11 per cent, and they had a huge demand for commodities. But this time around, Chinese demand is not staging a comeback. To the contrary, its own domestic consumption has come down, making a recovery that much more unlikely,” said Ravi Uppal, MD & Group CEO, JSPL.Frank Benzimra, head of Asia equity strategy at Societe Generale, said: “The risk is now more on the Asian currencies, because of the currency policy of the new Chinese government.”“We expect Asian currencies to remain more vulnerable than other emerging market currencies due to the depegging of the Chinese yuan from the US dollar,” he told ET.Andrew Holland, CEO of Ambit Investment, expects China to remain a concern for markets and believes that the government there could offer some fiscal stimulus to assure the market on its growth.“Until China provides some fiscal stimulus, the concerns surrounding the economy are going to be there. China can give some fiscal stimulus, and that would assure global markets that its growth is going to be around the 6.7-7 per cent mark this year,” he said.“I think one has to be extremely careful in calendar 2016 about what is going to happen in China. Because that is going to be the single biggest factor for the world economy,” warned Sudip Bandyopadhyay, an independent market expert.Paul Schulte said the fears are a bit overdone. “People are prone to be dismissive of China, but they forget the resilience of the fixed income market in the while capital market,” he said.“A lot of the slowdown has been priced in, and there is going to be a lot of stimulus coming up from China, especially on the tax front and fiscal front. So I am not as concerned about China as many others are,” he said.