Chinese shares were down on Monday amid an unexpected easing in the country's manufacturing sector.

The Shanghai Composite Index, the main gauge of Chinese stocks, closed 0.6% lower to 3,809.66. The Shenzhen Component Index slid 1.0% to 13,448.29.

Appetite for Chinese equities waned as operating conditions across China's manufacturing sector eased in July, with the headline RatingDog China General Manufacturing Purchasing Managers' Index, compiled by S&P Global, coming in at 50.9.

The latest reading, which provides a gauge of factory sector conditions, was below the 51.7 recorded in the previous month and market expectations of 51.9 tracked by Investing.com.

On the regulatory front, China's State Administration of Foreign Exchange will expedite the opening up of the country's foreign exchange market and boost cross-border investment in the second half of the year.

In company news, Suzhou Zelgen Biopharmaceuticals (SHA:688266) posted first-half attributable net profit of 640.0 million yuan, compared with loss of 72.8 million yuan the previous year. Shares of the pharmaceutical company fell 11% Monday.