The benchmark Shanghai stock index rose 150% in 12 months to mid-June in a borrowing-fuelled surge, before plummeting almost a third in three weeks.
China's central bank has made $17 billion available to more than a dozen financial institutions to help boost the economy, it said on Wednesday, a day after injecting nearly $100 billion into two government policy banks.
The People's Bank of China (PBoC) provided $17.19 billion to 14 financial institutions through its medium-term lending facility to maintain liquidity in the banking system, it said in a statement on its official microblog.
The PBoC encouraged banks to use the funds to support small companies, agriculture and "weak links" in the economy, it said.
China's economy, the world's second-largest, expanded 7.4% last year, its weakest since 1990, and has slowed further this year, growing 7.0% in each of the first two quarters.
The government has set a target of around 7.0% growth for all of 2015.
On Tuesday, the central bank completed putting $48 billion into China Development Bank and $45 billion into the Export-Import Bank of China, the official Xinhua news agency reported. Both are policy banks which lend in line with government directives.
The move was to enhance their capital base and support the economy, it said.
"The injection suggests the central bank is trying to guide funds to go to the real economy, like exports and infrastructure construction," Wang Shengzu, China economist at Barclays Capital, told AFP.
In a bid to stimulate activity, China has cut interest rates four times since November and has also lowered the reserve requirement ratio -- the amount of money banks must put aside -- three times.
"The funds released from earlier monetary loosening didn't go to the real economy. Instead, most of it went to the financial institutions and the stock market," Wang added.
The benchmark Shanghai stock index rose 150% in 12 months to mid-June in a borrowing-fuelled surge, before plummeting almost a third in three weeks.
The Wutongshu Investment Platform Co., which invests China's foreign exchange reserves, carried out the policy bank fund injections and will become a shareholder in both, Xinhua said.
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
 "Representational image")
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}