In an effort to stabilize the markets, several measures were implemented that include caps on short selling, pledges by pension funds to buy more stocks and the suspension of initial public offerings.

"Overall I think the government has done a good job," Ahern said. "These short-term measures are warranted."

"Markets aren't easy to administrate, and governments are always second-guessed for intervening in stock markets. Even the US during the Lehman crisis banned short-selling of major financial stocks, and it was roundly criticized. The most difficult issue is how to allow shareholders of smaller stocks in China to sell when there's an automatic suspension on trading with a 10 percent drop in price. A mechanism to allow those on margin in these stocks to exit should be explored," said Halesworth.

"China's leadership has doubled down on its efforts to prop up equity prices," said Mark Williams of Capital Economics in a New York Times report. "There is a good chance that the market rescue efforts are seen to be a failure in a few months' time."

"The bubble is bursting", and predicting the bottom is anyone's guess, Stephen Roach, a senior fellow at Yale University and the former chairman of Morgan Stanley Asia, said on Tuesday on CNBC's "Squawk Box" program.

Bargain hunting after the plunge in Chinese stocks would be like "catching a falling knife", said Roach after recently returning from a trip to China.

Amy He contributed to this story.