(Yicai Global) June 9 — Confidence in China’s economic performance has recovered, rising from a two-year low last month, as chief economists polled by Yicai Global believe that the economy will improve soon with supporting policies coming into effect.
The Yicai Chief Economists Confidence Index rose to 49.8 this month from 47.6 in May, remaining in negative territory for the third month in a row, according to a survey of 19 leading economists in China. The figure was 47.8 in April.
Policies to stabilize economic growth continue to be enhanced, after Covid-19 restrictions in parts of China, including Shanghai, brought increased downward pressure to bear on the world’s second-largest economy along with overseas uncertainties.
The economists predicted that the Chinese yuan to US dollar exchange rate will decline to 6.68 by the end of June from 6.6607 on May 31, but they expect it to rebound to 6.63 by the end of the year. However, the yuan devaluation is beneficial to exports to some extent, they said, adding that Vietnam’s trade growth will not bring pressures to domestic exports, as the two countries are more complementary than substitutional in the long run.
Regarding the deposit and lending rates and reserve requirement ratio, one economist believed an RRR cut is possible in June, three of them expect a reduction of the one-year loan prime rate, two forecast a further decline in the five-year LPR, and other six of them think a cut of RRR targeting large financial institutions is possible this month.
Most indicators will bounce back this month, according to the survey. The new yuan loans will likely increase to CNY1.48 trillion (USD221.2 billion) in June from CNY645.4 billion (USD96.4 billion) in April and social financing is expected to reach CNY2.28 trillion, up by CNY0.91 trillion from the People’s Bank of China forecast released last month.
The economists predicted that the consumer price index in May is likely to have risen 2.2 percent from a year earlier, up 0.1 percentage points from April’s official data. They expect the producer price index to have jumped 1.5 percentage points slower last month than April’s increase of 6.51 percent.
Retail sales of consumer goods in May are expected to have contracted 7.1 percent from a year earlier, 4 points less than April’s decline, the economists predicted. Industrial added value is likely to have declined 0.5 percent last month from the same period a year ago, versus a year-on-year drop of 2.9 percent in April.
China’s exports rose 6.3 percent last month, up from 3.9 percent growth in April, and imports edged up 0.9 percent in May, while they were unchanged the previous month, according to the economists’ forecast. The trade surplus is likely to have risen 5 percent to USD53.7 billion in the period.
Editors: Xu Wei, Futura Costaglione
