The Shanghai Index fell 7% on Monday due to coronavirus fears.

Chinese mutual funds are facing new regulatory scrutiny in the face of a sharp selloff Monday. During the first day since the Lunar New Year holiday, the Shanghai Index fell by 7%. Chinese officials are doing everything they can to prevent a sharper decline.

While short selling is already illegal, the next crackdown centers on the actions of mutual funds.

Chinese Mutual Funds Urged Not to Sell

Chinese regulators have told mutual fund managers to avoid selling shares, according to reports. In the wake of the coronavirus, the China Securities Regulatory Commission has ordered mutual funds to only sell unless they face massive redemptions.

“Potential massive investor redemption is a big concern,” a fund manager told Reuters. “If that happens, mutual fund managers have no choice but sell.”

The new guidance raises outside concerns about transparency and accountability in the Chinese markets.

In addition, the Peoples’ Bank of China injected $174 billion into the markets. By comparison, that figure is larger than the GDP of neighboring Kazakhstan. In addition, the capital injections were larger than the entire market cap of Bitcoin.

As of Monday, the coronavirus had officially claimed 361 lives in China. The nation has reported a large uptick in confirmed cases in recent days.

Recent: Liquid Alternatives: The Goldman Sachs “Stealth” ETF