The rapidly rising influence of social media on the mainland is attracting close attention from professional investors and financial regulators concerned about its impact on the markets.
The China Securities Regulatory Commission announced on June 21 tighter supervision of market-sensitive information shared using social media platforms, in particular Weibo, the mainland's largest microblogging service.
The CSRC's statement came a day after rumours spread online about Bank of China facing insolvency, which triggered the worst turmoil in the interbank money market in decades.
A rumour about a shortage of cash at the Big Four bank to complete a payment on time was first reported by the Chinese-language 21st Century Business Herald on its website and through its official Weibo account, which has more than 1.8 million subscribers.
The newspaper is considered one of the mainland's most outspoken and pro-reform financial media outlets.
Within few minutes, its 140-word Weibo message about BOC's cash crunch was reposted by subscribers and other media Weibo accounts thousands of times. But within 24 hours, BOC denied the rumour, and the newspaper published a formal apology to the state-owned commercial bank and its readers.
The case took senior leaders in Beijing by surprise. On Tuesday, The Wall Street Journal reported, citing its own sources, that Vice-Premier Ma Kai, who is mainly in charge of economic and financial affairs, ordered the mainland's security department to find the source of the rumours.
Beijing has been concerned about the rising influence of social media for some time, but mostly from a political rather than market-related perspective.
Facebook and Twitter, which played key roles in pro-democracy movements in the Middle East, have been banned on the mainland for years. The content of Weibo - often dubbed the Chinese version of Twitter - especially postings related to political topics such as mainlanders' constitutional rights and the most recent July 1 march in Hong Kong, is often heavily censored.
"Obviously, the government realises Weibo and other social media tools can be used to roil the market, which will be a direct threat to national financial security and thereby social stability," a senior editor at a major state-owned newspaper in Shanghai said. "The next wave of Weibo censorship is coming, and the focus will be not only on political content but also on financial and economics-related content."
The editor said he had ordered his associates to be "more careful" about what can be shared on the paper's Weibo account.
Operators of other influential but non-official Weibo accounts that report financial and market news say the government's efforts to eradicate rumours online will make people more eager to hear those rumours.
"The verified official media accounts have a lot of restrictions from above on what they can post and share," said the anonymous operator of the popular Weibo account Financial Gossip Girl, which was established about a year ago and now has more than 200,000 subscribers.
Many Weibo users consider Financial Gossip Girl to be the Chinese version of the influential Twitter account GSElevator, which is believed to be operated by an anonymous Goldman Sachs banker, who often reveals outrageous quotes and insider thinking overheard at the headquarters of the bank in New York.
The microblogger for Financial Gossip Girl, who is believed to be a female financial professional in Beijing, told the South China Morning Post in online exchanges that part of the reason her microblog became so popular is the lack of market transparency and timely information on the mainland.
"Gossip is not our final goal, but in China, gossip has been proved a very effective way for us to get closer to reality," said the microblogger, whose account was suspended recently after it shared insider stories about the senior management of a fund house in southern China.
The fund house never came out with a clarification, but Financial Gossip Girl's Weibo account was mysteriously suspended for a few days - and then suddenly resumed operation.
About 90 per cent of daily trading volume on the mainland's stock markets is driven by retail rather than institutional investors. Retail investors often trade stocks on insider tips or market rumours, making price movements more volatile.
In some cases, market-sensitive information has been released on Weibo by top bosses and major shareholders of listed companies, including two of the mainland's richest men - Pan Shiyi, the chairman of Hong Kong-listed mainland real estate firm Soho China, and Shi Yuzhu, the chairman of New York-listed Chinese online game developer Giant Interactive - who are both influential Weibo users.
After they shared the information, the share prices of related companies rose or fell sharply, drawing the CSRC's attention.
In the United States, the market regulator gave its approval earlier this year to listed companies to use Twitter, Facebook and other social media to announce key information, and financial data providers, including Bloomberg, are exploring the automatic integration in their news feeds of information posted on important Twitter accounts.