The Nasdaq Golden Dragon China Index, which follows the 98 biggest US-listed Chinese stocks, has fallen by almost 15% in the last two trading sessions.
The index has now plummeted by more than 45% since hitting a record high in February.
The slump comes after a series of crackdowns by Beijing on its technology and education industries.
The latest blow came as Beijing unveiled a massive overhaul of China’s $120bn private tutoring sector, under which all institutions offering tuition on school curricula will be registered as non-profit organisations.
That pushed down the stock market value of private education firms in the US, Hong Kong and mainland China.
Shares in Tencent fell by another 7% on Tuesday in Hong Kong after China ordered the technology giant to end exclusive music licensing deals with major record labels around the world.
Regulators said the move was aimed at tackling the company’s dominance of online music streaming in the country.