Entries for GCSE Chinese have dropped by 35 per cent, after changes to the way exams are assessed.
The fall will come as a disappointment to ministers, who have been keen to promote the teaching of Chinese.
The figures for the GCSE - which covers both Mandarin and Cantonese - have dropped from 3,706 last year to 2,417 due to sit the exam this year, according to Edexcel and AQA boards.
Last year, education secretary Michael Gove set up a partnership between the Specialist Schools and Academies Trust and the Chinese government to train an additional 1,000 Mandarin teachers for secondary schools in England.
Speaking on a trip to China last year, he emphasised the importance of the language.
"Offering every young person the chance to learn Mandarin will help to encourage mobility between the two countries, equip the next generation with the skills they need to succeed, and ensure the long-term success of our economy and society," he said.
Experts say the decline is due to changes to the rules that now require the presence of a Chinese-speaking teacher during some assessments - making it difficult for mainstream schools to host the exams.
The changes were made by the last government in a bid to bring all foreign languages into line. Previously, Chinese GCSEs did not require an oral test, but now a speaking unit is required.
Under the changes, it is compulsory for speaking exams to be taken at the school, marked by a teacher and sent to the exam board for moderation.
Yuen-Wah Leung, vice-president of the Association for the Promotion of Chinese Education, said: "This year, there has been a very big problem for the Chinese (community) schools (in the UK). In the past, they were able to take the exam within their mainstream school.
"But this year it (the rule change) has caused a lot of problems because the mainstream school didn't want to take the responsibility."
Some of the drop can be offset against a switch to IGCSE exams to avoid the new regulations. Some 1,033 pupils have entered the Chinese IGCSE this year.
But Mrs Leung said this was not an ideal solution: "The IGCSE standard is between GCSE and A-level. If they enter GCSE the pass rate will be higher, so many of them are quite reluctant to shift. If Edexcel can work with Chinese schools and Chinese schools are quite happy to run the exam that will solve the problems. I know some schools tried to apply as examination centres but have been rejected."
An Ofqual spokesperson said: "We are aware of some concerns over the requirement for oral tests in some foreign languages and will be considering this issue as part of wider research into controlled assessment."