The Chinese stock markets have corrected again this week beginning with over 4% drop in the index. This is on top of the 10% drop recorded in the last ten days, which is due to the fear that the excessive bank funding in the last six months would lead to more bad loans.
The Chinese economy is expected to face major financial tightening by the banks with a view to avoid further increase in bad loans. The commodity prices have also cooled down in the last two weeks due to reduced demand from Chinese mills and factories.