China's official manufacturing Purchasing Managers' Index came in at 50.0 for January, the National Bureau of Statistics said on Friday.
Economists polled by Reuters had expected the official manufacturing PMI to come in at 50.0.
PMI readings above 50 indicate expansion, while those below that level signal contraction.
The manufacturing PMI was released just after the World Health Organization on Thursday declared a coronavirus outbreak that started in Wuhan, China as a global health emergency.
In its analysis of the data, China's statistics bureau said the impact of the coronavirus outbreak was not fully reflected in its January's PMI reading as the survey was conducted before Jan. 20. The virus outbreak was officially reported in late December.
PMI in the coming months "will give insight into how damaging the virus is," noted Martin Lynge Rasmussen, China economist at Capital Economics, a consultancy.
Economists at Nomura said they expect "a big plunge" in February PMI numbers to a range between 40 and 45, due to the virus outbreak.
"The services PMI could be hit harder than the manufacturing PMI, as a number of service sectors have come to a grinding halt since 23 January," they said in a note on Friday.
China's National Health Commission on Friday said there have been an additional 43 deaths and 1,982 new cases were confirmed, as of the end of Thursday. That brings the country's total deaths to 213 and 9,692 confirmed cases, the government said.
China's economy has been under pressure since last year, amid a long-drawn trade war with the U.S. Now, the outbreak of the coronavirus will likely put even more strain on the world's second largest economy which has seen slower growth.
To prevent the virus from spreading further, a number of provinces in China extended the Lunar New Year holidays — a move that will hit businesses and global supply chains.
The week-long Lunar New Year holidays typically distort manufacturing data due to front-loading and factory closures during that time. The holiday usually falls in the month of January or February each year.
Global markets have been selling off this week as investors fear widespread economic fallout from the coranavirus outbreak.
The official PMI survey typically polls a large proportion of big businesses and state-owned enterprises. Results of a private manufacturing PMI survey by Markit/Caixin — which features a bigger mix of small- and medium-sized firms — will be released on Monday.