Chinese police visits regulator, to probe "malicious" short-selling

The Chinese stock market has plunged nearly a third in the past month

Chinese police visited the office of the country's securities regulator on Thursday to investigate clues that suggest "malicious" short-selling of shares, state news agency Xinhua said, the latest effort by authorities to prevent a further meltdown in the stock market.

The country's stock markets have plunged roughly 30% over the last three weeks, with a series of increasingly aggressive attempts by authorities so far having failed to stem the massive exodus from a once-booming market.

Citing unidentified sources, Xinhua said Vice Minister of Public Security Meng Qifeng had led a team to the office of the China Securities Regulatory Commission on Thursday morning.

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The investigation shows that authorities will "punch back" against illegal activities with a "big fist", Xinhua said in its official microblog. It did not specify the illegal activities or identify any individuals under investigation.

The stock market rout has rattled investor confidence and raised concerns that it could pose an even bigger threat to the world economy than the Greek debt crisis. In Beijing's most drastic step yet, the securities regulator banned investors who own more than five percent of their shares from paring their stakes in the next six months.

Some members of the Chinese public have started to demand the resignation of Xiao Gang, the head of China's securities regulator, and a Reuters search online on Thursday showed that some of these calls were censored by authorities.

Searches for the term "Xiao Gang step down" on Baidu and Weibo, China's biggest search engine and its version of Twitter, respectively, showed the phrase "according to relevant laws, regulations and policies, some search results cannot be displayed".

However, searching on homonyms for Xiao Gang's name in Weibo yielded postings that called for his resignation.