The official Chinese Purchasing Manager's Index data released on Saturday showed manufacturing activity contracted sharply to its lowest ever levels in February, a reading of 35.7 points, down from 50.0 in January.
A reading below 50 points indicates activity is shrinking.
The data was confirmed today when a private-sector PMI, known as the Caixin Index, fell to 45.7 points, also a record low, from 51.1 in January. the Caixin measure includes a bigger mix of small-to-medium-sized firms than the official index,
Despite the sharpness of these declines, some observers said actual activity in the world's second-largest economy - and New Zealand's major trading partner - may have been even worse.
"There's still a lot of uncertainty out there and there's a lot of fear about the impact the coronavirus is going to have on the world economy, but a good chunk of that bad news is already priced in," said Michael Johnston, a dealer at XE.
Just eight weeks ago, the domestic currency was a good five US cents higher, Johnston noted.
Some anecdotal examples of the impact in New Zealand include a tourism business saying that Chinese visitors, now non-existent, usually account for about 25 per cent of revenue. Air New Zealand today offered 1,000 domestic seats for just $9 each, but at the same time has halved its capacity to Samoa to three flights a week.
The latter was in response to Samoa's health ministry requiring all passenger to carry a medical certificate indicating they are well and fit to travel.
Johnston said that while it is possible the situation may worsen, "global health officials will be working day and night to try to prevent that."
One factor that cheered the market today was the likelihood of concerted central bank action to cut already low interest rates even further.
Financial markets may stabilise "if we do get the central banks cavalry riding to save the day," he said.
The Federal Reserve and Bank of Japan have said they will do whatever's necessary to stabilise financial markets and the Reserve Bank of Australia is now expected to cut its cash rate tomorrow afternoon when it reviews monetary policy.
The New Zealand dollar was at 95.46 Australian cents from 95.64 cents at 5pm on Friday. It was at 48.55 British pence from 48.57, at 56.37 euro cents from 56.91, at 67.41 yen from 68.27 and at 4.3406 Chinese yuan from 4.3840.
The two-year swap rate eased to a bid price of 0.6950 per cent from 0.8452 on Friday while 10-year swaps fell to 1.0875 per cent from 1.1800. Earlier in the day, the two-year swap fell to a record low at 0.6288 per cent.
