Chinese share prices slumped significantly on Wednesday as a result of profit-taking in reaction to market falls in other parts of the Asia-Pacific region.
The benchmark Shanghai Composite Index plummeted 170.47 points, or 3.81 percent, to close at 4,300.56 points on a daily transaction volume of 173.415 billion yuan (22.9 billion U.S. dollars) .
The key indicator peaked at 4,502.30 points and hit a low of 4,284.87 points during the day's trading.
The Component Index on the Shenzhen Stock Exchange dived 404.37 points, or 2.66 percent, to conclude the daily trading at 14,795.20 points on a daily turnover of 95.486 billion yuan.
On Monday, the People's Bank of China, the central bank, announced it would raise the reserve requirement ratio by 0.5 percentage points to 12 percent for commercial banks from Aug. 15. It is the sixth time such a measure has been taken to mop up liquidity.
Some market analysts said that concerns over further policies to cool down capital markets, prompted investors to sell their holdings for quick profits.
Analysts also believe the slump was a direct consequence of Hong Kong's main index suffering its biggest drop in five months on Wednesday, amid fresh concerns over the possible fallout of the US housing sector.
Stocks on the Hong Kong exchange plummeted 700 points or 3.3 percent, while the Dow Jones index in the United States ended a two-day-long recovery and lost nearly 150 points.
Heavyweights led the downward trend. The Industrial and Commercial Bank of China declined 3.66 percent to 5.53 yuan, the Bank of China went down 2.58 percent to 5.29 yuan, China Life, the country's largest life insurer, was down 2.26 percent to 47.13 yuan, and Sinopec, the country's largest oil refiner, down 1.48 percent to 13.99 yuan.
There were 84 gains and 768 losses on the Shanghai stock exchange and 66 gains and 530 losses on the Shenzhen bourses.
The Hushen 300 index, which tracks 300 companies on the Shanghai and Shenzhen stock exchanges, closed at 4,290.48 points, down 53.47 points, or 3.81 percent, from the previous close.