New lending by mainland banks picked up slightly last month, mainly boosted by a rebound in infrastructure investments.

New loans are estimated to have risen to 700 billion yuan (HK$852.82 billion), up 2.7 percent from April's record low of 681.8 billion yuan, according to the China Securities Journal.

The amount is below market expectations of 750 billion to 800 billion yuan.

New credit issued from the big four banks - ICBC (1398), Bank of China (3988), China Construction Bank (0939) and Agricultural Bank of China (1288) - is expected to have decreased nearly 4 percent to 253 billion yuan last month.

A pair of Chinese manufacturing surveys has pointed to signs of a broadening slowdown in the economy on a deeper-than-expected deterioration in demand at home and abroad, also signaling the likelihood of more policy easing.

Hurt by a recession in Europe and a patchy economic recovery in the United States - the regions China most trades with - export growth has slumped to single-digit levels this year, a long way from growth of more than 20 percent seen in 2010.

Forecasts from 22 analysts call for China's exports to have grown an average 6.8 percent in May from a year earlier while imports may have gained 5 percent.

The monthly trade surplus is seen at $16.2 billion.

April saw exports climb a more modest 4.9 percent. Many analysts believe Chinese companies tend to ship more goods overseas in May as there is often a lull in April.

The trade data is due on Sunday. Other data, due on Saturday, is expected to show Chinese inflation cooled further in May and factory output growth near three-year lows, likely fuelling calls for China's government to take more policy action.

The HSBC China Services Purchasing Managers Index rose to 54.7 last month, from April's six-month peak of 54.1.

The survey's compiler, Markit, cited new business growth as the major driver of the index.

This should reduce the fears of a sharp growth slowdown, said Qu Hongbin, the chief China economist at HSBC, the survey sponsor. Going forward, the expected fast delivery of a mix of supportive measures should filter through to further boost services output and employment.

The increase in HSBC Services PMI comes in marked contrast to China's official non-manufacturing PMI, which showed a second straight monthly decline, easing to 55.2 from April's reading of 56.1.

The difference is a result of using different methodologies and samples. Still, both are above the 50 mark, which divides expansion from contraction.

The HSBC services barometer also reflected a strong level of confidence in near- term prospects and on a one-year horizon.

The pace of new order growth was the fastest since October 2010.

The new product developments and improving demand were cited alongside successful promotional activities as helping boost the headline index.

The degree of confidence was strong, with the index measuring business expectations only slightly lower than April's one- year high. Companies linked positive sentiment to expectations of new business wins and better economic conditions, Markit said.

On the downside, employment growth in the services sector last month was only modest and the increase in staff numbers was weaker than the long-run trend average for the survey.

Average input costs also increased, extending the current period of inflation in the services industry to 31 months. Higher labor-related costs were the main source of inflation.

And despite the increase in new orders, the backlogs of work in the services sector fell last month.

Shayne Heffernan

Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.

Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reached a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.Read the Terms of Service