China's stocks fell on Monday after data suggesting economic growth was running below the 2015 target level of about 7 percent heightened concerns about the health of the economy.
The economic concerns offset the impact of plans announced at the weekend to reform the bloated state-owned enterprise sector and produce "decisive" results by 2020.
Underscoring the fragility of China's financial markets even after some respite last week, currency traders suspected the central bank intervened to prop up the yuan in onshore markets, which wobbled following a report that net capital outflows in the first quarter of the year were more than $100 billion.
"China's economy faces relatively big downward pressure, so investor sentiment remains weak," said Gu Yongtao, strategist at Cinda Securities.
China's stock markets have been on a roller-coaster ride in the past few months, falling close to 40 percent since June and prompting frantic efforts by authorities to restore confidence. Still, at their peak this year, they were up more than 150 percent compared with the lows of 2014.
A surprise devaluation of the yuan in August further roiled markets, reinforcing concerns the economy was weaker than previously thought and forcing China to burn through its foreign exchange reserves to keep the currency stable.
A flurry of economic data in the past week has fed those concerns and prompted Premier Li Keqiang to try to reassure markets that China is on track to meet its main economic growth targets. The government has said it expects GDP growth of around 7 percent this year.
Price data pointed to increased deflation pressure and lower-than-expected industrial output and investment figures this weekend raised further doubts.
"Overall, the economy is very weak and the central bank may have to continue cutting interest rates and banks' reserve requirement," said Zhou Hao, senior economist at Commerzbank AG in Singapore, adding he thought growth would dip below 7 percent in the July-September quarter.
China's benchmark CSI300 index .CSI300 of the biggest listed stocks in Shanghai and Shenzhen closed down 1.97 percent, while the Shanghai Composite Index .SSEC dropped 2.67 percent.
China CSI300 stock index futures fell, some by as much as 7 percent, underlining investor scepticism in the stock market's upside potential.
Government plans on restructuring of state-owned enterprises (SOEs), including allowing private investment, appeared to offer little for investors to feed off.
The mammoth task could involve some 25,000 enterprises owned and managed by local governments and more than 100 managed centrally under the State-owned Assets Supervision and Administration Commission, or SASAC. "The plan has long been expected," said Cinda's Gu. "So interest toward the theme could be short-lived."
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