China's government is trying to end the era of cheap money
Chinese stock markets have fallen sharply as the country's central bank indicated its credit tightening policy would continue.
The Shanghai Composite SSE index more than 5% to 1,965 points, about 1,500 points below its 52-week high.
Meanwhile, the CSI300 index tumbled more than 6% to 2,170 points in afternoon trading.
Traders reacted negatively to the People's Bank of China saying liquidity in the country was still "reasonable".
This is despite the fact that its mostly state-owned banks are currently charging each other some of the highest lending rates ever - over 12% in some cases - enforcing a kind of state-sponsored credit crunch.
After the global financial crisis in 2008-09, China unleashed a huge monetary stimulus in an attempt to boost economic growth, but is now concerned that too much cheap cash has flooded its financial system.
Last week, data suggested Chinese manufacturing activity for June had fallen to a nine-month low.
And with the World Bank lowering its 2013 growth forecast for China from 8.4% to 7.7%, the markets expected the government to apply economic stimulus measures again.
But Monday's statement from China's central bank has temporarily scotched such expectations, hence the market reaction.
Source: BBC News - Business http://www.bbc.co.uk/news/business-23026947#sa-ns_mchannel=rss&ns_source=PublicRSS20-sa
