Mixed signals from China, which is attempting to shift its economy away from exports and investment to a consumer-driven model, have deepened concerns about the outlook for world growth, she said.
Uncertainty is “something that markets do not like”, Lagarde told a panel of business leaders and economic regulators in the snow-blanketed Swiss ski resort.
Investors have struggled with “not knowing exactly what the policy is, not knowing exactly against what the renminbi is going to be valued”, she said, referring to China's currency.
“I think better and more communication will certainly serve that transition better”.
The world's second-largest economy this week announced its 2015 GDP growth as 6.9 percent, its slowest in a quarter of a century.
The figure cast a shadow over the summit, where IHS chief economist Nariman Behravesh told AFP that Chinese policymakers had “fumbled” and had “added to the uncertainty and the volatility by their behaviour”.
Fang Xinghai, the vice-chairman of China's securities regulator, said at the same panel that “in terms of communication, we should do a better job”.
“We have to be patient because our system is not structured in a way that is able to communicate seamlessly with the market,” he added.