We think monetary policy easing should be accompanied by an easing in property control policies as the risk of a sharp property price correction has increased significantly.

We expect more policy stimulus to come through in the coming months to secure a soft landing.

Inflation is set to trend down further, which provides ample room for additional policy easing, including both a quicker pace of fiscal spending and a more supportive credit policy.

Given that maturing repos and PBoC bills will be quite small in the next few months, another RRR cut could step in June or July.

China’s exports continue to face strong external headwinds, despite the slight improvement in the earlier manufacturing PMI releases.

The improvement of both China’s services and manufacturing PMIs in April supports our view that earlier easing measures are starting to work and China’s economy will bottom out in 2Q.

China's economy will usually regain momentum in Q2, led by more supportive monetary conditions, as well as the gradually recovering external demand.

With growth still slowing and risks tilted to the downside, Beijing will likely ease further on both the monetary and fiscal fronts

We expect Beijing to continue stepping up easing efforts through another 100bp RRR cuts, open market operations, tax breaks and fiscal spending on public works in 2Q.

March export growth beat market expectations, suggesting that external demand conditions have continued to improve.

Today's trade data confirms the weakness in both China's external and domestic fronts. Net exports will likely become a major drag on GDP growth in 1Q 2012.

We think that today's CPI inflation number is unlikely to lead the PBoC to ease monetary policy soon. As such, we believe that PBoC's policy outlook will continue to be biased towards caution.

Get ready for more easing steps into 2Q2012. We expect at least another two RRR cuts (each 50bp) in 1H 2012.

We maintain our forecast that China's economy will grow 9% this year, supported by solid domestic demand and improving external conditions.