China's devaluation could be serious, with the countries official growth rate of 7 percent already questioned by many. Significant drops in Chinese markets over recent weeks have raised a lot of questions, with the Asian giant still trying to engineer a much-needed shift away from export-led growth towards consumer spending. While the growth of the middle class in China is undoubtedly having a positive impact on this transition, an over-valued yuan has also helped to move Chinese money overseas.

The Yuan devaluation is being seen by many as an attempt by China to resume its role as an exporter of deflation to the rest of the world, with devaluation putting pressure on the US Federal Reserve to hold off from raising interest rates next month. Central bankers in the UK, Australia and many other countries are also likely to be questioning rate rises, with cheaper yuan cutting the price of imports, undermining inflation, and possibly delaying interest rate rises across the world.

The Australian economy is heavily dependent on China, with the Aussie currency, property market, and resources sector all deeply intertwined with the Chinese economy. The Australian property boom is partly due to a 35 percent devaluation of the Aussie dollar against the yuan over the last four years, with Chinese investors snapping up Australian properties like never before. While the recent devaluation of the yuan may ease pressure on the Australian property market, this will not happen if the local currency locks step with the yuan.

According to UBS economist George Tharenou, Chinese devaluation is a direct response to the countries weaker economy, with a further weakening of the Aussie dollar expected over the next couple of months. "If the Fed hikes were 'pushed out' it would raise the risk that [the Australian dollar] fails to sufficiently insulate Australia's economy from a weaker China, which could pressure the [Reserve Bank of Australia] to ease again," he said in a research note.

The Australian resources sector is also likely to feel the pinch, with the yuan devaluation partly a result of China's massive debt-fuelled investment binge over the past few years. With China needing less of Australia's steel and other resources, exports and prices are likely to continue falling. With China accounting for a quarter of all Australian exports, a weaker China means a significantly weaker Australia. According to research conducted by Oxford Economics, other hard-hit countries are likely to include Brazil, Russia, Chile, and Korea.