The Shanghai Composite closed down 5.33 per cent at 3,016.7 points, reports The BBC.
Global markets made big losses after Chinese trading was suspended twice last week on dramatic plunges in values that triggered a circuit breaker mechanism, and spurred more volatility.
China suspended the use of that tool on Friday, a move that reassured traders.
Weak inflation data over the weekend did little to encourage investors.
China’s consumer inflation edged up 1.6 per cent in December from a year ago. That compared to a 1.5 per cent rise in the previous month.
But deflation risks remained in the world’s second largest economy as factory-gate prices continued to fall for the 46th consecutive month, down 5.9 per cent.
The central bank also set the guidance rate for the yuan higher for the second consecutive session to boost sentiment, but investors still remained downbeat on the market.
Hong Kong’s Hang Seng index closed down 2.8 per cent at 19,888.5 following mainland shares.
“It feels as though we are right in the epicentre of the fear, panic and confusion in global markets,” said Chris Weston, market strategist at trading firm IG in a note.
