China's surprise decision to allow its currency to fall hit the shares of airlines and oil on Tuesday, threatening to boost their fuel costs and dragging stock market indexes lower.

Exporters surged, however, on expectations that the currency move would improve their competitiveness.

The central bank described the near 2 per cent devaluation as a "one-off", based on a new way of managing the exchange rate that better reflected market forces, but economists said the timing suggested it was also aimed at helping exporters and the sluggish economy.

The CSI300 index fell 0.5 per cent to 4,064.79 points by the end of the morning session, while the Shanghai Composite Index lost 0.4 per cent to 3,912.86 points.

"Yuan depreciation is apparently bad for importers and good for exporters," said David Dai, Shanghai-based investment director at Nanhai Fund Management Co Ltd.

"The excitement over state sector reforms is not sustainable. The market will be volatile."

Import-related sectors weighted on China's main indexes, which jumped over 4 per cent on Monday on hopes of state sector restructuring.

Top carriers China Eastern, China Southern and Air China all slumped more than 4 per cent in Shanghai, and tumbled over 10 per cent in Hong Kong.

Oil giants PetroChina and Sinopec lost over 1 per cent in Shanghai.

Exporters such as trading house Shanghai Materials Trading Co and Garment makers Luthai Textile Co surged by their 10 per cent daily limit by midday.

"There has been a gap between the strength of the yuan and China's economic fundamentals," said Du Changchun, analyst at Northeast Securities. "The recent trade data was ugly."

Traders generally brushed aside the market impact of a possible change in China's top securities regulator, Xiao Gang. Sources told Reuters that China's ruling Communist Party has begun looking for an eventual replacement for Xiao, who faces internal criticism over his handling of this year's boom and bust in Chinese stock prices.

Stocks rose in Hong Kong, with the Hang Seng index added 1.0 per cent to 24,755.51 points, and the Hong Kong China Enterprises Index gain in 1.5 per cent to 11,461.84. – Reuters