(Bloomberg) -- Chinese state-backed funds were said to intervene on Tuesday to alleviate declines in the stock market, a sign that the rout had gone too far for policy makers. The equity benchmark erased a loss of as much as 3.2%.The funds, known as China’s “national team,” stepped in to ensure stability during the government’s key policy meeting 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 on Tuesday.The CSI 300 Index of stocks was little changed as of the midday break. Offshore investors purchased a net $514 million of Chinese shares via Hong Kong in the morning session, according to data compiled by Bloomberg. Private funds also re-entered the market, encouraged by evidence Beijing is putting a floor on losses. Some of the biggest gainers were stocks that had led the rout, such as Kweichow Moutai Co. and China Tourism Group Duty Free Corp.News of state intervention in the $10.6 trillion equity market lifted other assets in China and Hong Kong. The Hang Seng Index extended gains to 1.4%, while the offshore yuan strengthened 0.3% against the dollar. The yield on 10-year government debt was little changed at 3.26%.Historically, Beijing has supported markets when needed around significant events or dates. On Friday, the first day of the National People’s Congress, 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 having fallen about 13% since its peak to enter 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.The Communist Party has long sought to cultivate a ‘slow’ bull market in equities. Routs of 10% or more in the CSI 300 have occurred twice in the past two years, before the index bounced back each time. Officials will be happy to see one-way bets subside, allowing the market to return to a more sustainable trajectory before July, when the Party marks its 100th anniversary.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.