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Coach Shui Qingxia said the gulf between her side and European opponents was "huge" after a 6-1 thrashing by England saw China bundled out of the Women's World Cup in the group stage for the first time.
China were an early powerhouse in women's football, making at least the round of 16 in the six previous World Cups they have played and finishing runners-up in 1999 during their heyday.
A shock triumph at last year's Asian Cup – their first regional title since 2006 – sparked hopes that it could fuel a return to China's former glory.
But they were outclassed by European champions England in Adelaide and depart the tournament in Australia and New Zealand with just one win, a narrow 1-0 triumph against debutants Haiti.
"I want to thank our players for all their preparations and fighting spirit," said Shui, a Steel Roses legend who won the Asian Cup five times as a player.
"Ultimately, we need to analyse and find things to improve in the future."
Shui, appointed as the first Chinese woman to lead the team after their embarrassing flop at the Tokyo Olympics, conceded China faced an uphill climb to become a side that can compete at the top level once again.
"Definitely, this generation, there is a huge gap between us and European teams," she said.
"We will go away and work on our transition, our balance, our physicality and try and fix these shortcomings.
"This generation's efforts will help the generation to follow."