The market has since stabilised after government support, but the Shanghai Composite Index remains far below the semi-official recovery target of 4,500 points.
Market sentiment elsewhere has also been struggling in recent days, with US indices dropping by just over 2% last week and the FTSE 100 also falling back once again.
The Shanghai Composite Index closed down 8.5 percent at 3,725.56 with most of the plunge occurring in the last hour of trading.
The dramatic 30 percent slide in Chinese shares in June came after a sizzling yearlong rally took the market to multi-year highs even as the world’s second-biggest economy slowed.
In an apparent effort to boost investor confidence and keep markets stable, China’s securities regulator started probing major shareholders of eight listed companies, for allegedly selling shares in their companies illegally.
“They [the Chinese government] may withdraw support today to test whether the market has recovered its resilience”, Zhang told the Journal. But Australia’s S&P/ASX 200 gained 0.4 percent to 5,589.90. South Korea’s Kospi fell 0.4 percent to close at 2,038.81.
Both copper, for which Chinese demand is an important driver, and the broader Thomson Reuters CRB commodities index hit their lowest in six years.
Industrial profits fell 0.3% in June from a year earlier, the statistics bureau said Monday, after data Friday showed a private gauge of manufacturing dropping to a 15-month low.
The dollar was weak ahead of the week’s main set piece – Wednesday’s Federal Reserve policy decision and statement – with a better than expected survey of German business sentiment pushing the euro above $1.11 for the first time in a fortnight.
US benchmark West Texas Intermediate for September delivery fell 26 cents to $47.88 and Brent crude for September was down 10 cents to $54.52 a barrel.
In foreign exchanges the dollar was at 123.48 yen Monday, down from 123.81 yen in New York and well off the levels above 124 yen earlier Friday in Asia.