Chinese shares fell below the 3,900 point level on Wednesday as the yuan continued its decline.
The benchmark Shanghai Composite Index closed down 1.06 percent to stand at 3,886.32 points. The smaller Shenzhen Component Index edged down 1.55 percent to close at 13,117.1. The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, lost 2.84 percent to end at 2,622.19.
Total turnover of the two exchanges shrank to 1.1 trillion yuan (173.8 billion U.S. dollars), down from 1.34 trillion yuan on Tuesday.
The value of yuan continued to head south on Wednesday after the central bank's reform of the exchange rate formation mechanism the day before, sending exporters' share prices up.
Textile manufactures and clothing companies rallied, with shares of Lu Thai Textile and Shanghai Metersbonwe Fashion & Accessories up by the daily limit of 10 percent.
Companies in tourism, aviation, and software development were among the biggest losers.
State-owned enterprises (SOEs) continued to do well, thanks to expectations of reform, with shares in Sinoma International Engineering and Jihua Group reaching the daily upper limit.
Three companies under the state-owned Aviation Industry Corporation (AVIC) suspended trading, raising speculation of potential capital restructuring. Zhonghang Heibao, a subsidiary of AVIC, jumped by 10 percent.
Zhang Yidong, an analyst with Industrial Securities, said investors should keep an eye on reform to SOEs in the short term, especially mergers in construction, shipping, and nuclear power.
Wednesday's decline accompanied weaker economic data for July. Industrial output expanded only 6 percent year on year in July, down from 6.8 percent in June.
Fixed-asset investment retreated from the 11.4 percent growth in the first half to 11.2 percent in the January-July period and retail sales climbed 10.5 percent year on year in July, slightly down from the 10.6 percent growth recorded in June.
