The impact of China's 'credit crunch'


Chinese stock markets have fallen sharply as the country's central bank indicated its credit tightening policy would continue.

The Shanghai Composite SSE index fell 5.3% to 1,963.24 points, over 1,540 points below its 52-week high.

Traders reacted negatively to the People's Bank of China (PBOC) saying liquidity in the country was still "reasonable" and that the era of cheap cash was over.

The BBC's Linda Yueh said that the Chinese government would say it was being "prudent" but many others would say it "looks a little tight".

She explained that China was not suffering a "credit crunch" in the traditional sense, as most of the banks in China were state-owned, but that a lack of cheap credit from the central bank would have a wider impact.

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