China's manufacturing activity dropped to a seven-month low, according to the HSBC's preliminary purchasing managers' index (PMI) released on Tuesday.
The HSBC flash manufacturing PMI for December dropped to 49.5 from November's final reading of 50, HSBC said in the report.
A reading above 50 indicates expansion, while a reading below that represents contraction.
"The manufacturing slowdown continues in December and points to a weak ending for 2014. The rising deflationary pressures, which fundamentally reflect weak demand, warrant further monetary easing in the coming months," said HSBC chief China economist Qu Hongbin.
Data from the National Bureau of Statistics showed that the consumer price index, a main gauge of inflation, rose 1.4 percent in November, the slowest pace in five years, indicating weak aggregate demands.
The country's gross domestic output (GDP) expanded by 7.3 percent year on year in the third quarter of this year, the slowest quarterly growth since the first quarter of 2009.
Its GDP growth for 2014 may stand at 7.4 percent, in line with the government's annual target of around 7.5 percent, according to a research group led by Ma Jun, chief economist of the central bank's research bureau.