Chinese stocks continued to fall, though elsewhere in Asia stocks returned to gains after global markets had been rocked by dramatic losses the previous day.
The mainland benchmark Shanghai Composite was down 3.2%, adding to Monday’s dramatic 8.5% drop.
Overnight, stocks in Europe and the US had also seen sharp falls.
The worldwide sell-off was driven by fears that China’s slowing growth might pull down economies around the globe.
Investors are worried that firms and countries which rely on high demand from China – the world’s second largest economy and the second largest importer of both goods and commercial services – will be affected.
China’s central bank devalued the country’s currency, the yuan, two weeks ago, raising fresh concerns that a slowdown in the country’s economy was worse than originally feared.
Recoveries elsewhere in Asia
Elsewhere in Asia though, markets beat analysts’ expectations, returning back to positive territory.
Hong Kong’s Hang Seng was up by 2.6% while Australia’s S&P ASX/200 rose by 2.2% and Japan’s Nikkei 225 was 0.7% higher.
The gains came despite the losses in Europe and the US over night.
In volatile trading, Wall Street’s Dow Jones fell 6%, then almost recovered its losses before closing 3.6% lower.
Earlier, London’s FTSE 100 index closed down 4.6%, with major markets in France and Germany down by 5.5% and 4.96% respectively.