SHANGHAI -- China's stock markets continued their plunge Friday, to end the week 12 percent lower, amid a growing debate about who’s to blame for the recent sell-off, which has wiped close to 30 percent off the market’s valuation in less than a month.

The Shanghai Composite Index (SCI) fell for the third consecutive day, closing 5.77 percent down at 3,686.92, well below what's seen as the psychologically important 4,000 mark -- or roughly where the market was three months ago, before a heady boom took it to a seven-year high of more than 5,200 points in the first half of June, leading to euphoria among Chinese retail investors.

That mood has now turned to anger, as more than $2.65 trillion in market value has been wiped out in three weeks. And the search for a scapegoat continued on Friday. The official Xinhua news agency reported that Financial News, a newspaper under China’s Central Bank, had repeated allegations that foreign banks and traders might be to blame for what some have described as “malicious” short-selling of Chinese shares -- although other media said investors had only themselves to blame.

China’s securities regulator announced on Thursday that it was investigating possible market manipulation, based on what it described as “unusual moves” on Shanghai’s stock and futures exchanges, relating to stock-index futures. And on Friday regulators announced they were suspending trading in some 20 short-selling accounts.

Publicly, however, the authorities have -- some have argued belatedly -- debunked the theory, which had been gaining traction online in the past few days, that foreign capital was to blame for this week’s falls (which wiped out the gains from a short-lived rebound on Tuesday, the market’s highest one-day rise in six years). The China Financial Futures Exchange on Wednesday denied speculation that "overseas investors have been shorting A-shares via stock futures," the China Daily reported. 

And a commentary in the official Global Times newspaper said on Friday that, while markets are always “rife with speculative behavior that is not always legal,” and some foreign capital did come into China through “covert channels," foreign capital only played a “small part” in the Chinese stock market, and the impact it could have was limited. The Global Times said the real reason for the dramatic fall was inherent risk resulting from the recent bull run, which saw the market rise more than 150 percent in the year to mid June. (Even after recent falls the ratio of earnings to enterprise value remains more than double that of listed companies in the U.S. and Europe, Bank of America Merrill Lynch analysts said this week.)

Experts quoted by the Global Times said that massive margin trading -- borrowing money, sometimes based on shares already owned, to buy more shares -- was also a factor in the slump, with many traders who had left themselves overexposed seeing their accounts forcibly liquidated. One Chinese academic, meanwhile, said the fall in the market could have been caused by executives of Chinese-listed companies selling off shares in large quantities. 

Nevertheless, the speculation about “foreign forces” reflects the sense of panic among many investors, particularly those who are new to China's market. Tens of millions of citizens are believed to have opened new trading accounts in the past few months -- China now has 90 million registered stock market investors -- but analysts have said that the presence of so many inexperienced retail investors is adding to the volatility of a market that some economists have long described as something of a “casino.” Some investors have panicked following recent falls, and have begun selling off their holdings -- despite government efforts to stabilize the market.

On Wednesday, the authorities took the latest in a series of steps aimed at propping up the market -- cutting trading fees by 30 percent, and relaxing the rules on how much capital investors needed to be allowed to engage in margin trading. China’s central bank also announced it was injecting more than $5.6 billion into the market.

Yet following the declines of recent days, the China Daily reported warnings that stock market turmoil could generate a “systemic financial crisis” that could spill over into the country's sluggish economy. Lian Ping, chief economist at China's Bank of Communications, told the Global Times that consumption could be hit by the slump as people who had lost savings in the market would have less purchasing power.

There are also concerns that the fall in the market will hurt some of the 400 companies hoping to raise funds by listing on the stock market in the second half of this year -- more than double the number of firms that listed in the first six months. Some experts have already called for a temporary suspension of new listings.

China’s Premier Li Keqiang was expected to preside over a meeting about the stock market after his return from an official visit to Europe, media reported on Friday. And some investors still expect the government to intervene further to shore up the market -- with speculation about a possible cut in stamp duties on stock market transactions.

The government’s commitment to the stock market, which officials have said could provide a much-needed boost to China’s economy this year, was emphasized earlier in the week, when the authorities announced China's massive state pension fund would be allowed to invest some 30 percent of its holdings in the stock market.

But some experts have warned of the risks of going too far to shore up the famously volatile market.

“It’s necessary to have a policy to stabilize the market when there’s a kind of panic,” Zhou Hao, China economist at ANZ Bank in Shanghai told International Business Times. “But it’s not a good thing to consistently help the market. Of course whenever the market crashes, the retail investors will push the government to do something, but that’s not what we need to see – [in that case] at the end of day they’ll have a bigger loss because they believe there’s no risk.”