The Chinese government can’t be happy that the mainland’s stock markets have fallen into bear market territory.

Most people have interpreted Saturday’s interest rate cut by the People’s Bank of China as a blatant attempt to put a floor on the decline. Regulators also said they would allow the National Social Security Fund to buy more stocks.

This would bring more money into the market. So, the latest rumor popping up is that the central bank isn’t just changing policy, but is actually buying blue chip securities to stabilize the market in the form of Chinese ETFs.

The four biggest exchange-traded funds (ETFs) on the Shanghai Stock Exchange attracted nearly 10 billion yuan ($1.6 billion) worth of subscriptions on Monday. This sparked speculation that state-backed institutions were moving into the market to prop up shares, reported Reuters.

Intensive subscriptions were seen in the four major ETFs – China AMC 50 ETF, Huatai-PB CSI300 ETF, China AMC CSI300 ETF and Hua An Shanghai 180 ETF, exchange data showed.

On top of the ETFs receiving large cash inflows, some ascribe Tuesday’s rally to institutional investors doing behind-the-scenes “window guidance.”

In the past Chinese state-owned asset management companies such as Central Huijin have intervened to buy or sell shares en masse to stabilize sentiment, and investors suspect that a recent surge of money into Chinese ETFs is in fact coming from government coffers, said Reuters.

Volatility is still the name of the game in Chinese stocks. The Shanghai Composite Index slid 5.2% to 4,053.70 at Wednesday’s close, after surging 5.5% Tuesday. Thirty-day volatility on the measure jumped to the highest level since December 2008. Industrial, commodity and financial companies led the rout, while 13 stocks fell for each that rose.

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