(Yicai Global) June 7 -- The Yicai Chief Economists Confidence Index fell for the third straight month to 50.27 this month as experts say more policy boost is needed.

China’s economy will continue to recover and expand but still requires policy support, according to the poll done with 17 chief economists. An index reading above 50 indicates growth.

The Consumer Price Index should rise by 0.19 points in May, accelerating growth from April as consumer inflation is expected to widen, according to the poll. The Producer Price Index should fall by 4.34 points, more than the decline of 3.6 points in April, as wholesale prices are predicted to decrease.

In May, retail sales of consumer goods are expected to increase by nearly 13 percent from a year ago. The industrial value-added is expected to increase by 4.5 percent and fixed-asset investments are expected to rise by nearly 4.5 percent.

Chief economists expect China's imports and exports to fall by 7.9 percent last month from a year ago. The nation's trade surplus should tally USD92.5 billion.

New yuan loans are expected to rise to CNY1.57 trillion (USD220.7 billion) in May, up from April's CNY718.8 billion.

The total social financing should rise to CNY2.22 trillion (USD311.7 billion), which is higher than the official figure of CNY1.22 trillion in April. 

M2, a broad measure of money supply that includes cash and checking deposits, may have declined by 12 percent in May from a year ago. Nine of the 17 financial professionals said deposit and loan interest rates are not likely to be cut and the reserve requirement ratio for large financial institutions may not change this month.

Economists expect the Chinese yuan to be traded at 7.09 versus the US dollar as of June 30, and on Dec. 31, the rate should be 6.91, lower than the earlier forecast of 6.68. The chief economists predicted that China's forex reserves may be USD3.21 trillion as of May 31, up from the official figure of USD3.2 trillion in April.

China's local government debt is controllable, and the leverage ratio of Chinese governments is low, according to Shao Yu from Orient Securities. The driving force for economic growth in the future will come more from government borrowing, especially from the increase in the leverage ratio of the central government, Shao added.

Li Wenlong at the Pan-Asia Research Institute of Digital Economy said that local governments' pressures on debt repayment are increasing with more risks, indicating that the usual model of issuing debt to invest in infrastructure to bolster economic growth is no longer sustainable.

To this end, it is necessary to restructure and reduce government debt, decrease administrative expenditures, increase support for the private economy, and form a virtuous cycle of industrial investment to economic growth, Li added.

Editor: Emmi Laine