The Shanghai Composite index closed 0.4 percent weaker at 2,535.10 points, while the blue-chip CSI300 index was down by 0.2 percent.
China's producer prices in December rose at their slowest pace since September 2016 as factories confront a slowdown in demand even as Beijing steps up policy support to bolster the economy.
The "slowdown is in line with the wider trend, but the scale of the fall was surprisingly big. It reflects that the Chinese economy deteriorated really rapidly in the fourth quarter of last year," said Steven Leung, director of sales at the brokerage UOB Kay Hian in Hong Kong.
These worries helped offset the optimism brought about by the Chinese central bank, whose governor promised on Wednesday to ratchet up support for the economy by improving its policy transmission mechanism.
"The economy is obviously weak, but what's changed is that it is now weak beyond the market's expectation. We would expect stronger policy support to come," said Cao Xuefeng, head of research at Huaxi Securities in Chengdu.
CSI 300's financial sector sub-index closed lower by 0.3 percent, the consumer staples sector edged up 0.1 percent, and the healthcare sub-index ended 0.5 percent lower.
The smaller Shenzhen index and the start-up board ChiNext Composite index were weaker by 0.3 percent.
The largest percentage gainers in the main Shanghai Composite index were Baoding Tianwei Baobian Electric Co Ltd, XiAn Typical Industries Co Ltd, and Jiangsu Sunshine Co Ltd, all up by 10.1 percent.
The largest percentage losses in the Shanghai index were Pengqi Technology Development Co Ltd, which closed down 10.1 percent, followed by ARTS Group Co Ltd, which ended 10 percent lower and Pengqi Technology Development Co Ltd, which closed 9.9 percent lower.
About 15.99 billion shares were traded on the Shanghai exchange. The volume in the previous trading session was 19.19 billion.