Shanghai stocks were up 2.15 percent at midday on Monday after the government unveiled its biggest package of measures so far to shore up the slumping market, but an initial surge was pared as analysts questioned their effect.
The benchmark Shanghai Composite Index rose 79.45 points to 3,766.37, though it erased most of an initial 7.82 percent rally at the open.
But the Shenzhen Composite Index, which tracks stocks on China's second exchange, turned into negative territory, falling 2.59 percent, or 54.43 points, to 2,044.05. It had opened 6.55 percent higher.
The Shanghai market had plunged almost 30 percent over the three weeks to Friday, prompting the government to intervene over the weekend.
On Sunday, the government said the central bank would provide liquidity through the state-backed China Securities Finance Co., which manages margin trading, to "protect the stability of the securities market", according to market watchdog the China Securities Regulatory Commission (CSRC). It gave no amount for the funds.
The CSRC also said on Sunday that there would be no initial public offerings (IPOs) "in the near future", according to a separate statement. State media said 28 companies whose flotations have already been approved would postpone them.
Chinese regulations mean new share issues offer near-guaranteed profits and so drain funds from the rest of the market, hurting prices and sentiment.
On Saturday, China's 21 largest brokerage firms announced they would invest at least 120 billion yuan ($19.3 billion) in so-called "blue chip" exchange traded funds (ETFs).
The moves come after other actions last week -- including an interest rate cut, relaxed rules on margin trading, and proposals to let the state social security funds invest in equities -- failed to arrest steep declines.
"This type of state-led market-saving has never been seen before, even when the market crashed during the last financial crisis," Zheshang Securities analyst Zhang Yanbing told AFP, referring to the global economic meltdown of 2008.
But other analysts took a more cautious view, questioning whether the gains were sustainable following the sharp rises of the past year.
Until last month mainland Chinese markets were among the world's best recent performers, with Shanghai rising more than 150 percent in a spectacular borrowing-fuelled bull run in the 12 months to its top on June 12.
"The market may show a knee-jerk reaction to the measures but I am not sure how sustainable it will be," Ronald Wan, Hong Kong-based chief executive officer of Partners Capital International, told Bloomberg News.
Analysts say China needs to move towards a more market-oriented economy, instead of more heavy-handed government measures represented by the stock market bailout.
Leaders declared in 2013 that the market would play a more "decisive" role in the world's second largest economy. Proposed reforms include reforming the IPO system to allow the market instead of the CSRC to determine which companies offer shares.
"These (stock market) measures are meant for short-term fix, but can’t address the fundamental problems facing China’s equity and financial system," ANZ Banking Group said in a research note.