Chinese stocks are dropping, with the Shanghai Composite Index coming off its largest weekly decline in three months. Alec Young, global equity strategist at S&P Capital IQ, says the rout may continue.

China has cut its growth target to 7.5 percent for 2012 from 8 percent previously, yet at the same time it’s not yet willing to cut interest rates much. And that’s a recipe for lower stock prices, Young tells Yahoo.

Investors had hoped that with inflation declining, China would be willing to slash rates. “But authorities have signaled that property prices are too high for their liking, and that they’re not ready for across-the-board interest rate cuts,” Young says.

That has led investors to take profits in stocks throughout emerging markets, he says.

“Until real estate prices come down enough that Chinese officials are comfortable cutting interest rates to kind of stoke the recovery, investors are going to continue to worry that we may get more slowing than the market expects," Young says.

And that could curb global investors’ demand for Chinese stocks, he says.

Li Jun, a strategist at Central China Securities, has a mixed view on China’s stock market. “First-quarter economic growth and earnings will be poor, and the market will be disappointed,” he tells Bloomberg.

“On the other hand, we’ll see more pro-growth policies. That may offset some of the downside risk of the market.”