The Wall Street Journal writes, "China's main stock index entered bear-market territory Monday as a surprise interest-rate cut over the weekend failed to lift the market amid concerns over investors' debt levels, while uncertainty about Greece shook sentiment elsewhere in the region. The Shanghai Composite Index closed down 3.3% after a day of choppy trading in which the market shifted regularly from positive to negative territory. The index is 22% lower than a high on June 12, crossing a 20% threshold that defines a bear market. The smaller Shenzhen market ended down 6.1% and the ChiNext board, which consists of small-cap companies and is sometimes known as China's Nasdaq, ended the day down 7.9%. In Hong Kong, the Hang Seng Index fell 2.6%, its biggest one-day loss in over a year, while offshore listings of Chinese companies, known as H-shares, sank 3%. 'Things don't look settled at all and some institutional investors are still paring their positions. The monetary-easing measures aren't enough to more than offset the panic in the past two weeks,' said Zhang Gang, a senior analyst at Central China Securities."
"Underscoring China's growing global influence, the country launched a new investment bank Monday with 50 countries backing an institution meant to boost the region's economy but also to put Beijing at the center of its development. Representatives from Britain, South Korea and Australia were among those taking part in a ceremony to sign the articles of association in the Great Hall of the People, with the United States and Japan the most notable absentees. The fact that many U.S. allies joined the Asian Infrastructure Investment Bank (AIIB) on Monday - despite Washington's initial objections - was seen as a major diplomatic victory for Chinese President Xi Jinping," reports The Washington Post.
NBC News reports, "U.S. patrols in the disputed South China Sea will be permitted but a Japanese military presence there is "unacceptable," according to a Chinese general. 'The United States used to have military bases in Southeast Asia, like in the Philippines and even in Vietnam, and they have military cooperation with Singapore, so American military presence in the South China Sea is acceptable to China,' said Major General Zhu Chenghu, a professor of strategic studies at China's National Defense University. Zhu is known for his hawkish views towards the United States. 'As for the Japanese military presence, it is very difficult for the Chinese people and the Chinese government to accept it,' he added. China has been building artificial islands in the Spratlys - which are also known as the Nansha Islands."