Stocks continued to edge down on Monday, with about a thousand stocks tumbling by the daily limit of 10 percent.
The benchmark Shanghai Composite Index sank 5.3 percent to 3,016.70 as of closing, extending last week's 10 percent plunge, while the Shenzhen Component Index slumped 6.2 percent to 10,212.46.
The market rout came as China's consumer inflation gauge hit a six-year low, according to official data released over the weekend. The consumer price index (CPI) increased 1.4 percent year on year in 2015, down from a 2 percent increase in 2014 and the government's 3-percent target.
HSBC analyst Qu Hongbin said CPI growth was much lower than previous levels, showing rising deflation pressure caused by sluggish demand will pose a major risk in 2016.
The CSI 300 Index, which tracks some of the largest-cap stocks in Shanghai and Shenzhen, retreated 5 percent to close at 3,192.45.
A total of 664.2 billion yuan of shares changed hands at the two markets on Monday.
Attention on regulators' handling of the market rout has increased after the securities watchdog pulled the circuit breaker mechanism that had only been implemented for four days. The new rule was blamed for aggravating market uncertainty and causing a roller-coaster slide at the beginning of the year.
