Mainland stocks on Thursday posted their steepest one-day decline since April.
Analysts said sluggish factory data weighed on sentiment.
In Hong Kong, the benchmark Hang Seng Index ended trading on Thursday down 403 points, or 1.6 percent, at 24,773.
The Chinese H-share index listed in Hong Kong, the Hang Seng China Enterprises Index fell 1.7 percent, and mainland developers listed in the city fell 4.3 percent.
Up north, the benchmark Shanghai Composite Index closed down 1.18 percent at 3,573 while the Shenzhen Component Index ended 1.73 percent lower at 11,009.
The combined turnover of these two indices stood at about 1.94 trillion yuan, up from 1.84 trillion yuan on Wednesday.
Stocks related to glass and bio-pharmaceutical sectors led gains while stocks in the nonferrous metal and furniture industries suffered major losses.
The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, lost 1.66 percent to close at 2,328.
The pullback broke a rally that had briefly carried the Shanghai index into bull territory. Still, the benchmark advanced 3.7 percent in July, its best performance since September and a third straight month of gains.
Fresh data showed China's manufacturing activity shrank for a fourth straight month in July as demand at home and abroad weakened, further dampening the growth outlook. (Reuters/Xinhua)