World No.41 Birrell suffered a 6-4 6-4 loss to Czech Marie Bouzkova at the WTA 1000 event in Beijing on Saturday night.
Birrell, 28, who won the Korea Open last Sunday with a win over compatriot Maya Joint in the final, raced out to a 3-1 first-set lead before dropping serve twice to lose it in 42 minutes.
Down 3-0 in the second, Birrell lifted and won the next four games but was broken twice more to see her involvement in the Chinese capital come to a premature end.
For Bouzkova, the 28-year-old 18th seed, a meeting with China's Zheng Qinwen awaits.
The 2024 Olympic champion was leading Anna Kalinskaya 6-7 (4-7) 6-4 3-0 when the Russian retired.
Earlier, Queensland veteran and former doubles world No.1 Storm Hunter was beaten 6-2 6-2 by Maria Sakkari in just 73 minutes.
The 182nd-ranked Hunter failed to join 20-year-old fellow Aussie Taylah Preston in round three, losing serve six times in her latest hardcourt tournament clash in Asia.
Next up for Sakkari, the Greek 25th seed and former world No.3, is Elina Svitolina.
The sixth-seeded Ukrainian came from a set down to eliminate Czech Katerina Siniakova, 1-6 6-4 6-2.
Elsewhere, there were wins for third seed Coco Gauff, eighth seed Iga Swiatek, 21st seed Ann Li and 24th seed Jelena Ostapenko.
"I think this time of the year, it's really a final push and I think today was a good match to start of the Asian Swing," said 2024 champion Gauff, after her first match in nearly three weeks.
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