(Bloomberg) -- The bearish mood prevailing in China’s stock market is proving a match even for state-backed funds, and casting a cloud over the Communist Party’s biggest annual political event.The CSI 300 Index closed about 2.2% lower despite evidence that state-backed funds had intervened to shore up the market in morning trading. The news earlier helped the gauge erase losses of as much as 3.2%, before declines resumed in the afternoon. Kweichow Moutai Co., the stock that’s become an indicator of sentiment in China’s mutual fund industry, fell 1.2%.The funds, known as China’s “national team,” had stepped in order to ensure stability during the National People’s Congress in Beijing, according to people familiar with the matter. A Hong Kong-based trader, who declined to be identified discussing client business, said entities linked to mainland funds were actively buying shares through stock links with Hong Kong Tuesday morning.The CSI 300 has now plunged more than 14% from its Feb. 10 high in the biggest loss among global benchmarks tracked by Bloomberg. Declines have been led by the champions of the recent rally such as Moutai, which has fallen 26%.The China Securities Regulatory Commission, which regulates the securities industry, didn’t immediately reply to a fax seeking comment on whether state funds were behind Tuesday’s moves.Historically, Beijing has supported markets when needed around significant events or dates. On Friday, the first day of the NPC, the CSI 300 ended the day down 0.3% after falling as much 2%. Evidence of intervention includes buying through trading links with Hong Kong.Authorities had in many ways encouraged the recent correction in stocks after the CSI 300 briefly surpassed its closing record last month. Officials repeatedly warned of asset bubbles and said that curbing risks in the financial system was this year’s key policy goal. Moutai, for instance, had surged 30% this year to be worth more than $500 billion, making it one of the world’s most valuable stocks.With the CSI 300 entering a correction on Monday, and dropping below its 100-day moving average for the first time since May, it’s likely authorities decided the rout had removed enough froth. Slumps of 10% or more in the CSI 300 have occurred twice in the past two years, before the index bounced back each time. The Communist Party, which has long sought to cultivate a ‘slow’ bull market in equities, will need to do more to restore sentiment this time.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.