The China Securities Regulatory Commission (CSRC) has set up a team to look at "clues of illegal manipulation across markets," after sharp falls see in the last two weeks news reports have stated.
The market is down as much as 27 per cent since hitting 2015 highs on June 12, 2015. The severe fall has left investors with huge losses.
The fall has come despite the People's Bank of China cutting interest rates and the reserve requirement for banks.
The authorities also relaxed regulations to borrow money to buy shares, but it helped little during the course of the week with investors continuing to sell.