A breakdown of the survey showed firms cut their staffing levels again in February and at the quickest pace in nearly five years due to lower output requirements and fewer new orders.
Meanwhile, input costs and output charges both declined at their fastest rates in eight months. According to anecdotal evidence, relatively muted demand for inputs enabled firms to negotiate discounts on production materials, the bank said.
The HSBC data follows the release of the official PMI over the weekend, which edged down to a 8-month low of 50.2 in February from January's 50.5, but ahead of market expectations of 50.1.
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Yoon-Chou Chong, investment director, Aberdeen Asset Management Asia says he isn't giving much weight to the data as it was likely distorted by the Lunar New Year holidays, which began at the end of January this year.
"There are bigger changes going on in China, policy-making wise. You've got things like the anti-corruption drive, focus on pollution. At the moment, how the PMI numbers go, is probably not in the main frame of mind of politicians. There are more things to deal with it," Chong added.