The Shanghai Composite is down nearly 2% to 2,101.
This follows on disappointing manufacturing data, with the HSBC Flash PMI reading hitting a nine-month low of 48.3. The contraction in manufacturing comes as analysts are lowering their growth forecasts for China.
Concerns about a liquidity crunch continued to mount, and stocks also took a beating as money market rates surged. Fed chairman Ben Bernanke's prepared remarks that the taper could begin as early as this year, also hurt Asian markets.
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