The global university rankings have been produced annually since 2004, and are built on an analysis of almost 19 million research papers, 1.5 millions votes in a survey and data on more than 30,000 universities, THE said.
It ranked 109 UK institutions out of 2,191, and this was the first year that the UK had fewer than 50 universities in the top 500.
That makes the UK the joint-fourth most represented country in the rankings, behind the United States, India and Japan.
Phil Baty, THE's chief global affairs officer, said there were "clear warning signals of serious decline for the UK's 'jewel in the crown' university sector".
"This year's rankings highlight a dramatic and accelerating trend – the shift in the balance of power in research and higher education excellence from the long-established, dominant institutions of the West to rising stars of the East," he said.
"We appear to be shifting towards a new world order and a new, Eastern centre of gravity for new knowledge creation and innovation, and the UK must act to support its university sector if it is not to miss out."