(Yicai) Aug. 7 -- Confidence in China’s economy improved in August for the first time in five months and remains in positive territory, according to chief economists polled by Yicai Global who believe that the country’s economic recovery will gain steam as more supportive policies are rolled out.

The Yicai Chief Economists Confidence Index for August was 50.46, an increase of 19 basis points from July, according to the results of the Shanghai-based media group’s latest poll. A reading above 50 indicates confidence.

The consumer price index, a gauge of inflation, will dip 0.38 percentage point in July from the same time last year, the economists said. The CPI logged zero growth in June, according to data released by the National Bureau of Statistics. And the producer price index, which is a measure of industrial profits, will slump 4.82 percent, they said.

The CPI will tumble as food prices continue to slide, while the decline of the PPI will narrow as the price of crude oil and copper increases, said Xu Dongshi, chief economist at China Galaxy Securities.

In July, the retail sales of consumer goods are expected to jump 4.36 percent year on year, much higher than June’s 3.1 percent as reported by the NBS, the economists said.

Consumption is largely determined by macroeconomic growth, said Zheng Houcheng from Yingda Securities. The amount of spending is affected by consumer prices and household income. A more complete social security system will make people feel safer in the medium to long run, and thus encourage them to spend more.

Industrial value added is expected to rise 4.51 percent in July from a year ago, fixed assets investment will climb 3.77 percent, and the trade surplus will probably be around USD72.5 billion due to pressure on foreign trade, the chief economists said.

New loans for July are expected to reach CNY1 trillion (USD140 billion), total social financing should hit CNY1.4 trillion, and M2 broad money may expand by 11.1 percent year on year, the experts said.

The benchmark lending rate, known as the loan prime rate, and the reserve requirement ratio for banks will most likely stay the same in August, all the economists bar one said. And deposit rates should remain unchanged this month, they said, with the exception of one who expects them to fall.

Editor: Kim Taylor