SINGAPORE (Oct 22): The renminbi this week touched its weakest level in almost two years even as the Shanghai Composite Index sank to a low of nearly four years — testing the government’s ability to maintain market calm as risks mount for Asia’s largest economy.

Chinese stocks have now slumped about 30% since their January high as Beijing struggles to maintain financial stability amid slowing economic growth, a trade war with the US, and rising US interest rates. 

Policymakers have so far refrained from undertaking major market rescue efforts, but concerns are mounting over some US$603 billion ($829 billion) of shares pledged as collateral for loans — or 11% of China’s market capitalisation — which could tip the market into a downward spiral.

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