The latest data paint a much more bearish picture of the manufacturing sector than the official PMI released by the National Bureau of Statistics last week, which crept up to 50.4 from 50.3 in March.

The PMI came in at 48.1, lower than the 48.3 flash reading, and staying below the 50-mark that separates expanding activity from a contraction.

The Australian dollar slipped 0.2 percent on the news, retreating further away from the $0.93 hit earlier in the session. Meanwhile, Australian shares entered negative territory while Shanghai shares widened their losses.



According to Arup Raha, chief economist at CIMB, while the number is "not great," he remains optimistic over the outlook for the world's second largest economy.

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"I think we're at a turning point in which case the data is a little bit patchy. Not too worried about one number and monthly data. We're expecting the China exports will turn around," he said.



"If you look at the OECD leading indicator, if you look at what's happening with industrial production in Europe, if you look at rise in disposable income in U.S., global growth will be picking up. China is the largest single participant in global trade, it's an extremely diffcult case to make to say that this whole thing is going to happen without China getting a piece of the action," he added.