Lan Shen, economist at Standard Chartered, points out that their latest SMEI survey indicates a further softening in China’s SMEs’ performance in May following ‘green shoots’ in Q1 this year.

“The headline SMEI – based on our monthly survey of more than 500 SMEs nationwide in China – eased to 54.7 in May from 56.8 in April and 57.1 in March. The growth momentum indicator (new orders less finished-goods inventories) moderated for a second straight month in May. The ‘current performance’ and ‘expectations’ sub-indices retreated synchronously in May, for the first time since the start of the year, reflecting headwinds to growth momentum. Both domestic and external demand weakened, weighing on production activity. Prices remained largely contained, constraining profitability. SMEs’ credit conditions remained largely stable in May, though they did not improve further. Expectations of Chinese yuan (CNY) weakening against the USD rose again in May on trade concerns, but were under control compared to Q3-2018, when the US announced the first batch of tariffs.”