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Asian Stocks Fall After Weak China Manufacturing Data

FILE - An employee works on an assembly line producing Mercedes-Benz cars at a factory of Beijing Benz Automotive Co. (BBAC) in Beijing.

Asian stock markets sank Wednesday after a new report fueled more worries over the slowdown in China's vital manufacturing sector.

Chinese manufacturing activity fell to its lowest level in over six years, according to a preliminary version of the closely watched Caixin purchasing managers' index.

The report adds to concerns over China's economic slowdown, as Beijing attempts to transition from an export-led to a domestic demand-led model of growth.
On Wednesday, stock markets in Shanghai, Hong Kong, Sydney, and Seoul all lost around 2 percent by close. That came after a heavy sell-off in the U.S. and Europe.

Investors are also concerned about a possible further devaluation of China's yuan currency, though Chinese President Xi Jinping on Tuesday pledged this will not happen.

Speaking in Seattle at the outset of his visit to the U.S., Xi said Beijing plans to let the yuan adjust by market forces, saying there is "no basis for continuous depreciation."

Beijing's surprise devaluation of the yuan last month was seen as an attempt to spur economic growth, since it will make Chinese exports much cheaper in foreign markets.

But a major devaluation risks causing a regional currency war, since many other nations could lower the value of their own currencies in order to protect their own export markets.