(Yicai Global) July 5 -- Chief economists have offered their predictions about the development of the Chinese economy this year, and it does not look rosy.

A group of top economists lowered their predictions about the yuan's central parity rate with the US dollar for the year-end, spurred by recent depreciation pressures. The expected value of the yuan is 6.68, which is more than 0.3 percentage points weaker than what the group thought a week ago, according to a survey done with 21 economists by local newspaper China Business Network.

One of the aspects that is damping the currency's prospects is US President Donald Trump's threats of trade tariffs worth USD34 billion of Chinese goods, which will come into effect tomorrow. 

Another point is the tightened and strict financial policy which generates a strongly shrinking effect, leading to an increasing downward pressure on the Chinese economy, said Chen Weidong, director of the Institute of International Finance at the Bank of China. The central bank needs to allow the yuan's moderate depreciation if it wants to relieve the pressure on Chinese firms, said Xu Sitao, chief economist of Deloitte China.

The survey participants also predicted that the average growth rate of gross domestic product will reach 6.66 percent this year and that the official foreign exchange reserves will decrease to USD3.08 trillion at the end of June from USD3.11 trillion in May. 

Some 81 percent of the participants said that the deposit reserve ratio will not change in July. However, Pan Xiangdong, chief economist of New Times Securities, suggested that the central bank might reduce the reserve requirement by 0.5 to 1 percentage point in order to guarantee a stable liquidity.

Editor: Emmi Laine