Major source of inflows reverses gear

BEIJING - A $1.7 trillion source of inflows into Chinese markets has suddenly switched into reverse, challenging the nation's money management industry and making a big impact on local bond and share prices.

The turbulence has centered on so-called entrusted investments - funds that Chinese banks farm out to external asset managers. After a long period of funneling money into such investments, banks are now pulling back in response to a series of regulatory guidelines over the past three weeks that put a spotlight on the risks.

Critics have blamed entrusted managers for adding leverage to China's financial system and reducing transparency.