China's export and import growth likely remained negative in May

China's key economic releases for May is expected to provide further evidence of stabilisation. May PMIs suggest that downward growth momentum is slowing. 

More monetary policy easing is required. Easing measures are likely to include further reserve requirement ratio (RRR) cuts and targeted monetary and fiscal policy support to boost credit demand. 

China's May trade data is likely to indicate that external and domestic demand remained weak. 

Standard Chartered notes:

• We forecast that while real activity likely remains lacklustre, money growth should have rebounded and credit growth remained stable in May. 
  
  
• We expect exports to have fallen 8.5% y/y (versus a 6.2% y/y contraction in April) given the muted external demand recovery, the Chinese yuan's (CNY's) strength relative to most other currencies, and last year's high base. This echoes the continued m/m contraction in new export orders in the official PMI. 
  
  
• We expect imports to have dropped 15.0% y/y in May, following a 16.1% drop in April.