China's approval rate of initial public offerings (IPO) continued declining in July as the securities watchdog steps up review, Shanghai Securities News reported.

The approval rate fell to 64 percent as the China Securities Regulatory Commission (CSRC) rejected four out of 11 applications last month, marking the second consecutive monthly drop after May saw a perfect approval record.

The CSRC has intensified supervision of companies to promote market-oriented competition and regulate market entry and exit.

Besides the lower approval rate, signals of zero-tolerance regulation were sent as a number of IPO applicants had been affected by the investigation into the financial fraud of Ruihua Certified Public Accountants, while the CSRC issued warnings over the misconduct of two brokerages regarding science and technology innovation board projects, according to the report.

The CSRC said it would integrate on-site inspections and regular supervision to keep IPO applicants on the right track. On July 11, it announced the inspection of 44 firms.

Chen Li, a researcher with Chuancai Securities, said the CSRC raised the threshold of corporate operation and financial indicators due to the major violations of several accounting firms.

Chen also attributed the decline to the business prospects of the applicants.