HANOI (TheStreet) -- Chinese stocks, battered by a sudden 30% loss earlier this year, are plummeting again this week as investors show signs of giving up confidence in the market, economic growth and Beijing's ability to control share prices.

An 8.5% loss Monday for the benchmark Shanghai Composite Index followed by a 7.63% fall a day later will prompt once-keen foreign investors to reconsider positions, analysts say, though many are expected to hold onto their shares with a longer-term view.

After the markets closed, the People's Bank of China cut benchmark interest rates and lowered lending and deposit rates by a quarter of a percentage point. The move aims to reduce the cost of corporate borrowing and, in a larger sense, seeks to support the stock market.

Shares fell Tuesday to 2,965 -- their lowest level this year and a yawning breach of the 3,500 no-fall line widely believed set by the government in July. Those losses in a market that had shed more than 30% in June and July after climbing 150% over the previous year shook stock markets offshore, from otherwise healthy Vietnam and Taiwan over to Wall Street.

The fall reflects "both current weakness of the Chinese economy as well as the government's ability to handle the downturn," investment bank Credit Suisse said in a research note Tuesday.

Specifically, securities firms may be making more margin calls like those that set off the June-July slump. They would be seeking repayment from China's mom-and-pop local investors whose debts doubled over six months to more than $322 billion in May, causing a bubble that sparked the selloff in June.

Chinese officials who had encouraged state-driven share buying and imposed limits on selling also may have suddenly given up this week, analysts say.

"Chinese government institutions have lost a great deal of money trying to support the market," said Jack Perkowski, managing partner of merchant bank JPF Holdings in Beijing. "I think the government may have decided to let the chips fall where they may."

Some investors worry as well about more macroeconomic slowing, which would hurt corporate earnings. China's GDP growth will ease to 7% this year and 6.8% next year after reaching 7.4% in 2014, the Asian Development Bank forecast in July, scaling back its March estimates.

Growth is slowing as China nudges its $10 trillion-plus GDP toward consumption rather than the old formula of manufacturing and state infrastructure spending.

"Foreign investors are blaming everything on China," Perkowski added. "The perception is that China's economy and stock market are crashing."

Selling also leads to more selling on pure sentiment, especially with A share valuations higher than their Hong Kong-listed H share peers and especially among "unsophisticated investors," said Michael McGaughy, money manager and consultant with Yuan Asset Management in Hong Kong.

"They've lost a lot of money in the past, so they see [the market] going down again, and they just get out of it to reduce pain," McGaughy said.

Individual foreign investors cannot trade A shares but may buy into China funds offered by some of the 276 offshore institutions with quotas from Beijing to trade equities.

Offshore investors can invest, for example, in the ProFunds UltraChina (UGPIX) or the Morgan Stanley China A Share Fund (CAF) . Some individuals go with exchange-traded funds such as iShares China Large-Cap ETF (FXI) .

Those funds would do best to hold shares in Chinese firms such as AIA (AAGIY) and China Mobile (CHL), Credit Suisse says, because those companies "have strong micro fundamentals and are less susceptible to Chinese economic growth, but were dragged down by recent market weakness."

This article is commentary by an independent contributor. At the time of publication, the author held no position in the stocks mentioned.