Hopes seem to be fading for a quick recovery in China's massive manufacturing sector. The Caixin/Markit Manufacturing Purchasing Managers' index fell to 49.2 last month, below market expectations of 49.3.

April's reading was 49.4. Important to note is that although the slide is modest, the decline marks a reversal after two months of relative improvement. Analysts thought this would show that the economy is stabilising, maybe they have to think twice now.

All in all, the index has now been below the 50-point level which separates growth from contraction since March 2015.

Orders from home and abroad are also still shrinking, and factories kept reducing their purchases of raw materials and other goods used in production. The new export order index fell to 47.7 in May from 48.6 in April.

To dig deeper into those numbers, I sat down with Nomura's chief China economist and started by asking him about how the overcapacity problem in the steel, cement and glass sectors continues to weigh on China's manufacturing.