A recently released survey suggests Chinese manufacturing contracted in January for the first time in six months, putting a damper on the prospects for the world's second largest economy in the new year.
The Purchasing Manager's Index (PMI), released Wednesday by Britain's HSBC, fell to 49.6 in January. That is down from December's reading of 50.5 and is the lowest mark since August.
The PMI is a closely watched indicator of the health of China's economy. Any reading beneath 50 signals contraction for China's crucial manufacturing industry.
HSBC economist Qu Hongbin said the decrease was mainly caused by cooling domestic demand.
The data comes after Beijing announced earlier this week that its economy grew at 7.7 percent in 2013, its slowest rate of expansion since 1999.
China said its economy still faces "deep-rooted problems," including mountains of local authority debt, as it attempts to shift from export-led growth to a more sustainable model.
Asian shares were mostly lower following the release of HSBC's report.