For countries such as China that weaken their currencies to seek competitive advantage in global trade, there is a “distinction between the perception of the impact of a depreciation and the actual impact a depreciation can have”, says Michele Ruta, one of the study’s authors.

The reality today, he says, is that years of data show the impact is likely to be much less than it used to be.

There are a number of reasons for that. But the biggest, say Mr Ruta and his colleagues, is the advent of global supply chains over the past two decades and the reality that many products today are agglomerations of parts made in many different countries

The result is a much more complex calculus for many economies such as China’s and products that have become necessities of modern life.

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Weaker currencies do still lower the cost and therefore raise the international competitiveness of many goods exports while increasing the cost of imports.

For something as simple as a bottle of Australian shiraz squeezed from grapes grown on Margaret River vines, that reality still holds and matters. A weak Australian dollar will lower the cost of an exported bottle and make it more attractive to offshore consumers. It will also increase the price of imports into Australia of French or Chilean rivals, providing another boost to the local industry.

But for more complex products, like many of the electronic items assembled in China, the real impact is far more difficult to calculate.

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In the case of a smartphone, for example, the screen may have been imported from Japan and the main chip from South Korea, while other parts are sourced in southeast Asia, Europe and even the US. So even as a weaker renminbi in theory lowers the price internationally of the finished product it also raises the cost of imported parts.

For that reason trade economists have increasingly begun to look at who gains the real “value-added” profits from products. Wherever you may buy an iPhone designed in California and assembled in China from parts from all over the world, most of the profits go to Apple not to Foxconn, the Taiwanese assembler or its workers in mainland China.

However, despite the shift in the global economy, in the case of China there is one reason why its exporters may gain more from a weaker currency than they once would have.

China’s import intensity — how much of exports were made up of imported parts — has fallen dramatically in many categories over the past decade. China has been expanding its own homegrown supply chains, something trade economists have cited as one reason for slowing growth in global trade in recent years.

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The exact timing of margin calls may vary but it is common practice for brokerages to impose two margin calls on their clients; the first one in the morning session based on overnight moves in offshore markets and the second call in the afternoon session, said to be around 2pm in China, based on the day’s trading.

Margin calls occur when brokerages request investors who have borrowed from them to either deposit further cash or to unwind their bets, if the market has fallen below levels the broker can stomach. According to analysts, the second margin call tends to be more significant in China, thereby amplifying the selling pressure in the afternoon trading sessions.

“When force-selling kicks in, people just dump their shares hence these blatant downward moves. The sad thing is that this market is so nervous that whenever there’s a big move, the innocent man on the ground follows, fearing that he will be the last man standing,” Singapore-based Teo from CMC Markets said.

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Another factor underpinning the late-day swings in Chinese markets is the presence of state-backed buying. While these moves usually provide upward support for stocks, they can also work the other way.

“We [have noticed] bigger investors moving out of the market, perhaps worried about the repercussions of a slowdown and the government’s crackdown on short sellers. So they used the opportunity of state support to exit positions … and that usually happens towards the end of the trading session when state buying emerges,” said Aw, adding that Beijing’s “national team”, a coalition of state-backed financial institutions and regulators, usually steps in during the final hour of trading, around 2-3pm local time.

However in recent weeks, authorities have been tweaking their market-support tactics in a bid to be less predictable, analysts say. This could have fueled concern among investors that state support for the stock market may be faltering.

“The [state buying at around 2pm] has become a predictable characteristic in the aftermath of the market crash. The likes of the CSFC are trying different tactics, just like how the People’s Bank of China (PBOC) is going for a different strategy by devaluing the yuan. If I were a fund buyer, I wouldn’t want the market to know my pattern as well,” Teo told CNBC.

Independent analyst Fraser Howie agrees: “Remember they just inflated one of the world’s biggest equity bubbles, they popped it and tried to support it, then a few days ago they said they are not going to support it or at least step in only if it’s a real crisis. [With these changes,] you’re going to get volatility.”

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Johannes Eisele | AFP | Getty Images

An investor holds a notebook showing stock market movements, as he sits at a brokerage house in Shanghai, China.

Analysts believe that foreign investors may have played a role in exacerbating the late-day trading action.

“There’s been an absence of news that could have triggered [Tuesday’s steep fall, which started] as soon as afternoon trading resumed. Thus, I think there could probably be overseas selling because by that time of the day, European sellers would have come online,” Teo said.

Since the hemorrhaging began in mid-June, Chinese shares have gradually fallen out of favor with international investors. According to data from EPFR Global, net outflows from Chinese and Hong Kong equity markets reached $531 million in the week to August 12, marking the ninth week of outflows out of the past 10.