In China, policymakers have been looking to this day with anxiety. As the country continues to face an economic slowdown, CCTV correspondent reports that the rate increase will likely spur even more capital outflows, and generate additional headwinds for the world's number two economy.

The rate hike is the second increase by the Federal Reserve in 10 years. This may be good news for the United States, but not so for China.

Last year's increase resulted in increasing capital outflows, amounting to 123 billion US dollars in the first quarter of 2016.

"The key issue is how soon, how fast, how strong. I think that will impact the market. Because the markets have to adjust their positions. And the risk premium will be adjusted, which will cost global assets repositioning and capital flow movements," said Zhu Min, former deputy MD, IMF.

The rate hike will have a wide-ranging impact on China's own economy and monetary policy, though there have been signs of slight improvements in recent weeks. October trade data was positive, with both imports and exports increasing in dollar terms compared to a year ago.

Deflationary pressures also eased somewhat. The biggest headache for now however seems to be the capital outflows from China.

"There will be a little pull-back in the dollar in terms of DXY strength so actually into the end of the year outflows from China could abate a bit, but they will come back in January when the quota for individual households to move 50,000 USD abroad renews," said Andrew Polk, Medley Global advisors. 

"So we will see a respite for Chinese flows into the end of the year, but they will short-lived, in January we will see strong outflows pressure again."

The new annual foreign exchange quotas of 50,000 US dollars for Chinese individuals will be implemented from January 1st, to .

The U.S. rate hike of 25 basis points is only the beginning. The move will further depress the value of the Chinese yuan and boost the dollar and it will exacerbate the already existing capital outflows that Beijing is trying so hard to restrict.

China has already spent a large portion of its foreign exchange reserves to manage the yuan's fall. Any continued appreciation of the dollar will put even more weight on Beijing to burn through its remaining reserves.

"We have to worry about foreign exchange reserves, they are starting to diminish, obviously they're the biggest reserves in the world so still huge," said Jeremy Stevens, Standard Bank.

"But I think a lot of people in the market look at 3 trillion US dollars and worry that going below that could even trigger more panic. So it's a volatile situation for the Chinese regulators and policymakers."

With continued positive inflation figures domestically, the question is whether the People's Bank of China could be pressured to tighten its own policy rates.

Most economists however forecast no change to benchmark interest rates through 2018.