Activity in China's vast factory sector grew at a milder pace in November as new export orders shrank, a preliminary survey showed on Thursday, bolstering expectations the economy could lose some of its vigour in the fourth quarter as Beijing shifts its focus to structural reform.

The Flash Markit/HSBC Purchasing Managers' Index (PMI), the earliest indicator of how the Chinese economy is faring each month, fell to 50.4 from October's final reading of 50.9.

But it remained above the 50 line which demarcates expansion from contraction for the fourth consecutive month, indicating the government has achieved the stability it sought to push through reforms.

"I think generally this still reflects a cautiously optimistic view on China's economy. The most important thing is that China will focus on reforms in the coming years," said Hao Zhou, economist at ANZ in Shanghai.

"I think in the short term, from now to next year, economic growth will still see some downside bias, as reforms will likely hurt some industries and sectors," he added.

The data pushed down the Australian dollar by a quarter of a U.S. cent, while China's CSI300 of the leading Shanghai and Shenzhen A-share listings dropped 1.14% in the first 30 minutes after the opening.

China's top leadership unveiled the boldest set of economic and social reforms in nearly three decades following a four-day conclave that ended last week. The reforms are expected to drive new growth in the world's second-largest economy.

Slower Growth Acceptable

China has set an annual economic growth target of 7.5% for this year, which officials and economists have said is achievable, though it would be the slowest growth in 23 years.

Beijing has made it clear that it would accept slower growth while it pushes ahead with reforms to wean the economy away from investment and exports towards domestic consumption.

A sub-index in the PMI measuring new export orders fell to a three-month low of 49.4 in November from 51.3 in October, reflecting lethargic external demand due to patchy recoveries in developed countries.

Overall new orders also edged down slightly, which could suggest that a revival in domestic demand is not yet strong enough to offset faltering external orders.

Among the 11 sub-indices in the survey, nine pointed to either slower growth or a contraction, including jobs.

Many economists said the economy is likely to show weaker momentum in the final quarter, after a rebound between July and September, because of slowing credit growth and a fall in restocking demand.

Thursday's PMI also confirmed that domestic companies could be approaching the end of a restocking cycle, adding to the view that growth momentum could soften in the coming months.

"The flash PMI shows stocks of purchases and finished goods all dropped below the 50 line, which could suggest that the restocking cycle is coming to an end and the economy is lacking in further strength," Jiang Chao, economist at Haitong Securities in Shanghai, said in a note to clients.

The final Markit/HSBC PMI for November is due on Dec 2, a day after the release of China's official manufacturing PMI survey