The England winger was sold to Chelsea last July for £21m and while he has spent most of the season on the banch at Stamford Bridge, City have seen a promising league position slip away.
Once in European contention, City are now languishing in 14th place after 6 straight defeats.
“It would have been fantastic to have kept him and added maybe 3 or 4 new faces,” Pearce told the Manchester Evening News.
“Taking Shaun out made a difference. The 10 goals that Shaun delivered probably would have put us in a European place.”