UPDATE: The Shanghai Composite fell further into bear market territory and was down as much as 5.2% on Tuesday.

It pared some of its losses and is now down 4.76% to 1,870.84.

Markets continue to be concerned about a liquidity crunch that could hurt already slowing economic growth.

The Shanghai Composite fell 5.2% on Monday after the People's Bank of China said that liquidity conditions were at "reasonable levels," despite the recent spike in interbank rates.

It has been argued that Chinese policymakers are willing to settle for some short-term pain in order to move towards more stable, longer-term growth.

The SHIBOR fix, Shanghai Interbank Offered Rate, for June 25 fell 75 bps to 5.7360%.

Here's a look at the five-day chart of the Shanghai Composite:

Note: When we first published the post at 11:55 p.m. ET, the Shanghai Composite was down 3.8% to 1,888.68.