(Yicai) Aug. 7 -- Chief economists polled by Yicai remained optimistic about China's economic outlook this month, expressing moderately higher confidence.

The Yicai Chief Economists Confidence Index edged up to 50.3 in August from 50.23 in July, staying above the key 50 level for the 19th month in a row, according to the findings of a survey of 15 leading China-based chief economists published yesterday.

China will continue to face certain pressure over economic development, but the recovery trend will not change, they indicated, adding that the country’s macroeconomic policies should continue to work to restore and steady demand.

While China faces some economic challenges, particularly in regard to domestic demand and the housing market, the first half of the year saw steady growth in gross domestic product and foreign trade, along with low inflation and stable employment rates.

The consumer price index likely rose 0.35 percent in July compared with a year earlier, faster than June's 0.2 percent increase, the economists predicted. They expect the producer price index to have fallen 0.81 percent, about the same as the previous month's 0.8 percent decline.

Retail sales of consumer goods probably surged 2.99 percent in July from the same period last year, quicker than the prior month’s 2 percent clip, they indicated. Their average growth forecast for industrial added value for last month was 5.27 percent, compared with 5.3 percent the month before. The trade surplus likely reached USD97.4 billion.

The economists expect new yuan-denominated loans and social financing to have fallen to CNY609.6 billion (USD84.9 billion) and CNY1.18 trillion (USD164.3 billion), respectively, in July from the previous month. M2, a broad measure of money supply that covers cash in circulation and all deposits, likely gained to 6.3 percent.

On July 22, the People's Bank of China trimmed the one-year and five-year loan prime rates by 10 basis points to 3.35 percent and 3.85 percent, respectively. The move followed a 25 bps reduction in February. The central bank also trimmed the rate on seven-day reverse repurchase agreements by 10 bps to 1.7 percent, the first reduction since August last year.

The economists expect the cuts to reduce financing costs for the real economy, steadying confidence and expectations as well as consolidating the momentum of economic recovery. None expect the PBOC to further lower the benchmark deposit rate, one-year LPR, and five-year LPR in the near future.

The economists expect the Chinese yuan to US dollar exchange rate to remain stable, with the redback possibly appreciating a tad to 7.11 at the end of August. It stood at 7.1346 on July 30. They predict an exchange rate of 7.03 at the end of the year, stronger than their previous forecast of 7.05 made in July.

Editors: Xu Wei, Futura Costaglione