The blue-chip CSI300 index rose 0.8%, to 3,886.00, while the Shanghai Composite Index ended up 0.9%, at 2,957.41.
Activity in China's services sector expanded at the fastest pace in three months in August as new orders rose, prompting the biggest increase in hiring in over a year, a private survey showed.
"China's economy showed clear signs of a recovery in August, especially in the employment sector," Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, said in a statement.
The survey helped offset worries over the more than year-long trade dispute between the world's two biggest economies.
US President Donald Trump on Tuesday warned he would be "tougher" on Beijing in a second term if trade talks dragged on, compounding market fears that ongoing trade disputes could trigger a US recession.
Sentiment was also boosted by robust gains in Hong Kong stocks, which surged
more than 3% in afternoon session.
Hong Kong leader Carrie Lam will announce on Wednesday the formal withdrawal of an extradition bill that triggered months of unrest and has thrown the Chinese-controlled city into its worst crisis in decades, Cable TV and other media said.
Around the region, MSCI's Asia ex-Japan stock index was firmer by 1.49%, while Japan's Nikkei index closed up 0.12%.
The largest percentage gainers in the main Shanghai Composite index were Ningxia Jiaze Renewables Corp Ltd, up 10.07%, followed by Bank of Xi'An Co Ltd , gaining 10.04%, and Guangdong Ellington Electronics Technology Co Ltd, up by 10.04%.
The largest percentage losers in the Shanghai index were People.cn Co Ltd, down 7.32%, followed by Xinhuanet Co Ltd, losing 5.92%, and Shandong Pharmaceutical Glass Co Ltd, down by 5.91%.