BEIJING - A disquieting atmosphere gripped China earlier this month. Rumours were spreading that numerous individual investors were committing suicide after suffering heavy stock market losses.
On July 8, China's stock markets were plunged into chaos, with the key Shanghai Composite Index tumbling as much as 8 per cent at one point.
In a surprise move, the Chinese leadership mobilized the Ministry of Public Security and the national police agency to take part in last-resort price-keeping operations.
On the morning of July 9, a ministry team of investigators, headed by Vice Minister Meng Qingfeng, visited the headquarters of the China Securities Regulatory Commission, in the capital's financial district.
Meng then declared that his ministry and the securities regulator would jointly launch a strict crackdown on "malicious" short selling.
Short sellers borrow shares whose prices they expect to fall, then immediately sell them. The idea is to buy the shares back at a lower price before returning them to their owner.
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