Deutsche Bank AG equity strategist John-Paul Smith recently said that he sees some of the same signs of a financial meltdown in China that led him to predict Russia's 1998 stock market crash months in advance.

"There is potential for a debt trap in industrial companies which can trigger an economy-wide financial crisis as early as next year," Smith said after issuing a report predicting that China's slowdown will lead to a 10 percent decline in emerging-market stocks next year, according to Business Week. "If I am wrong on China, I am wrong on everything."

In a sign that Smith might be right, the MSCI Emerging-Markets Index has dropped 5.9 percent, trailing the 22 percent rally in MSCI's developed-markets measure.

The Shanghai Composite Index, the benchmark equity gauge in the world's second-biggest economy, has lost 7.9 percent, heading for its third annual decline in four years.

The selloff in Chinese stocks has eased, however, since mid-November, when the government's top policy makers pledged the biggest expansion of economic freedoms in at least two decades, including private investment in state-controlled industries, accelerating convertibility of the currency and liberalizing interest rates, according to Business Week.

Goldman Sachs for its part upgraded Chinese equities to overweight.