The carnage in Chinese stocks continues. The Shanghai Stock Exchange has been one of the weakest performing major, global indices as it is flat this year, compared to the S&P 500's (SPY  ) 20% gain. Additionally, it's up around 50% from the March 2020 lows, while the S&P 500 is up more than 100%.

If we zoom in on Chinese tech stocks, the carnage is even more intense. The KraneShares CSI China Internet ETF (KWEB  ) is down more than 60% since its peak in February of this year. It is now essentially back to its March 2020 levels.

The challenge for investors has been the mix of rumors, real news, government crackdowns, change in priorities, and deceleration in the economy. On top of that, there are concerns about China's bloated real estate sector which many believe to be stuffed of bad loans and potentially pose a systemic threat to the country's financial system. Of course, the posterchild for this is Evergrande whose shares continue to slide lower, while default concerns linger.

Thus, it's not entirely surprising that Chinese authorities lowered the reserve requirement over the weekend which equates to about $1.2 trillion in easing. Notably, this is the first concession towards the business community following the country's abrupt shift towards becoming more onerous in terms of regulations and curbing corporate power. In essence, the country is prioritizing things like culture and environment as opposed to building wealth.

Another sign of this shift is recent rumors that Chinese authorities may look to de-list Chinese companies from US exchanges. And this would in essence be a move to counter U.S. regulators who are demanding more information from Chinese companies listed on U.S. exchanges.

Currently, most Chinese tech companies are listed on U.S. exchanges through a variable interest entity (VIE). These are essentially offshore structures. In reality, shareholders of these companies own the offshore, shell company which has a contract to operate the Chinese company.

This move evaded Chinese and U.S. regulations, but the structure is being called into question by regulators especially after the steep declines in these stocks. Essentially, U.S. regulators are demanding these companies share more information and increase transparency. Chinese authorities are unwilling to share such information which has resulted in an impasse with both threatening that delisting may be necessary.

Of course, this has only added to the fear and uncertainty around these stocks.