Stocks continued their roller coaster ride on Tuesday, with the country's tech-heavy Shenzhen index sinking 5.8 percent, as traders cut margin trading by a record.
The benchmark Shanghai Composite Index closed at 3,727.13, down 1.3 percent, in part reversing its Monday gains and distancing from the gauge's June 12 peak by 28 percent.
The Shenzhen Component Index lost 700.16 points to close at 11,375.60.
Latest data showed traders cut a record of 93.6 billion yuan ($15.07 billion) worth of shareholdings purchased with margin debt on the Shanghai exchange on Monday, as such outstanding balance fell for a eleventh day.
The plunge may be understated, said analysts, considering an increasing number of trading suspensions.
Almost 200 companies halted trading after the close on Monday, bringing the total number to 745, or 26 percent of listed firms on the two bourses, according to data compiled by Bloomberg. The suspensions have locked up $1.4 trillion worth of equity, or 21 percent of China's stock market value.
About 1,600 stocks dipped to a daily halt on Tuesday, led by real estate, aerospace and non-ferrous metals sectors, despite a flurry of policies launched by regulators to prop up the market.
The State Council ordered the suspension of new public offerings over the weekend to unleash liquidity locked up in share subscriptions, while brokerages and executives from 25 mutual funds vowed to buy stocks.
The China Securities Regulatory Commission announced on Sunday that the central bank would offer liquidity support to China Securities Finance Corporation, a State-owned facilitating margin loan service among brokerages.
The CSI 300 gauge edged down 1.8 percent to close at 3,928.
