The CSI300 index slumped more than 7% at the open and was down 4.8% at 3,739.18 points by 2.08am GMT.
The Shanghai Composite Index dropped 8% and was down 4.7% at 3,551.13 points by mid-morning.
China stock futures pointed to further losses.
Losses on the mainland also weighed heavily on Hong Kong shares, with the Hang Seng Index down 3.3% and shares of Chinese companies listed in the city falling 4.2%.
As the markets opened, only 11% of companies on the two key mainland markets were still trading.
Christopher Balding, a professor of economics at Peking University said that while it was not possible to know exactly why so many companies had suspended trading, a large number were doing so because they had used their own stock as collateral for loans and they want to “lock in the value for the collateral”.
“Today is all about China, with Greece in the background now that it’s been given a new deadline,” said Ayako Sera, a senior market economist at Sumitomo Mitsui Trust Bank in Tokyo.
“Shanghai’s early losses were like a cliff-dive, which had a huge impact on investor sentiment.”What fundamentals?