The 93 petaflop Sunway TaihuLight is installed at the National Supercomputing Centre in Wuxi.
At its peak, the computer can perform around 93,000 trillion calculations per second.
It is twice as fast and three times as efficient as the previous leader Tianhe-2, also from China, said Top500 which released the new list on Monday.
Its main applications include advanced manufacturing, weather forecasting and big data analytics, wrote Jack Dongarra in a paper about the new machine.
It has more than 10.5 million locally-made processing cores and 40,960 nodes and runs on a Linux-based operating system.