Flagging demand dragged China's giant factory sector into its sharpest contraction in over six years in September, a private survey showed today.
The bleak data came after the US Federal Reserve refrained from lifting interest rates for the first time in nearly a decade last week.
The Fed cited concerns that global problems, and China's slowing economy in particular, may hurt the US recovery.
The preliminary Caixin/Markit China Manufacturing Purchasing Managers' Index (PMI) fell to 47 in September, the worst since March 2009.
The index missed market expectations for 47.5 and slipped from August's final 47.3. Levels below 50 signify a contraction.
August was the seventh consecutive month in which China's manufacturing sector had shrunk.
The survey showed business conditions deteriorating almost across the board, as firms slashed output, prices and jobs at a faster pace as orders fell.
Global investors and policymakers have been on edge over the health of China's economy this year, as it looked set to log its weakest performance in at least a quarter of a century.
A plunge in China's stock market over the summer and a surprise devaluation in the yuan have roiled global markets, and raised doubts inside and outside China over Beijing's ability to manage the world's second-largest economy.
There are signs that China's stumbling economy have unnerved companies, financial markets and consumers around the world.
Sentiment at Asia's top companies soured in the third quarter to a near four-year low as some executives ranked the Chinese market as their top risk, a Thomson Reuters/INSEAD Asian Business Sentiment Index showed today.
Despite China having slashed interest rates five times since November, small and mid-sized Chinese firms are still starved for funds due to banks' preferences to lend to big, state-owned companies.
Accounting for up to 80% of urban employment and 60% of China's GDP, the woes of small Chinese companies could be harbinger of the hard times ahead.
