Chinese stocks have gone into freefall, posting their biggest one-day losses in more than eight years and futures trading is pointing to even bigger falls on Tuesday.

The Shanghai Composite Index closed down 8.5 per cent at 3,726 and the CSI300 index of the biggest listed companies in Shanghai and Shenzhen plunged 8.6 per cent to 3,819.

Official figures released by China's national bureau of statistics just before the break showed industrial profits fell 0.3 per cent in June from a year earlier.

Westpac senior economist Huw Mackay said those figures, combined with a disappointing business survey last week, could have driven investors to exit the market.

"I think there's been some pent-up selling pressure in that market over the last couple of weeks and it hasn't been released due to the very firm hand that the authorities have been holding over that market, but it all got released today," he said.

The precipitous falls on China's main share markets come after a three-week rebound sparked by government intervention to prop up the market.

Authorities cut interest rates, suspended initial public offerings, relaxed margin-lending and collateral rules and enlisted brokerages to buy stocks, backed by central bank cash, to support share prices.

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The battery of stabilisation measures followed a peak-to-trough slump of more than 30 per cent in China's benchmark indexes, which had more than doubled over the preceding year.

The markets had recovered around 15 per cent before Monday's renewed sell-off.

"There is still a lot of margin lending which is set against that market," Mr Mackay said.

"There is also a very large pipeline of prospective new capital raisings from the corporate sector, and I think that the consolidation which we've seen after the trough, when the market was in genuine freefall in early July, has created the desire for individuals to take any profits that they've accumulated over the last year or so."