China’s export and import growth likely remained negative

China's trade data is usually quite volatile. The May data is likely to indicate that external and domestic demand remain weak. 

"Exports  is expected to have fallen 8.5% y/y (versus a 6.2% y/y contraction in April) given the muted recovery in external demand, CNY strength relative to most other currencies, and last year's high base. Whereas, imports is likely to have dropped 15.0% y/y in May, following a 16.1% drop in April. Domestic demand remains subdued amid China's ongoing economic slowdown, and import prices likely fell more than 10% y/y", says Standard Chartered. 

As a result, the trade surplus may have widened to USD 43.5bn from USD 34.1bn in April. This would take the trade surplus for the first five months of 2015 to roughly USD 200bn, more than double the year-ago level. While this should fundamentally support CNY strength, it is a 'bad' surplus caused by weak imports rather than strong exports. Looking ahead, a recovery in external demand and a pick-up in key commodity prices should improve China's trade performance.