(Yicai Global) Dec. 7 -- Yicai’s gauge of confidence in China’s economy recorded its highest level this year, with the economists surveyed anticipating the upswing to continue next month.

The Yicai Chief Economist Confidence Index hit 53.57 in December. Ding Anhui of China Merchants Bank returned a score of 70, while the other economists gave forecasts of more than 50.

The economists expect the economy to grow at a 2.6 percent clip this year after a 5.5 percent expansion in the fourth quarter. That compares with the International Monetary Fund’s forecast for 1.9 percent annual growth this year. In October, the IMF said China is likely to be the world’s only major economy to expand in 2020.

China’s economic recovery will continue strong before the end of the year, according to Li Weanling of the Asia Institute of Digital Economy.

The three traditional major economic drivers -- consumption, investment, and exports -- especially exports, have played an important role in boosting China’s growth, the economists said, though the trend will fade in the second half of next year.

The economists expect monetary policy to remain stable, with no change this month in the benchmark one-year loan prime rate, the benchmark deposit rate and banks’ reserve requirement ratio. New loans, total social financing and M2 are each expected to have fallen last month from a year earlier.

Inflation

November’s consumer price index, the main inflation gauge, is likely to come in at 0.03 percent, a 0.47 point decline from October’s 0.5 percent, the economist predict. The producer price index, which tracks factory gate prices, is seen falling 1.72 percent, less than October’s 2.1 percent drop.

After declining for months, the CPI could bottom out in the near future, according to Wu Ge, an economist with Changing Securities.

Cold weather may lead to stable food prices and a future increase, while seasonal demand will also hedge against pressure of increased pork production capacity and prices of transport and other services will continue to climb. Taking into account factors such as the base, inflation is expected to see a moderate uptick after the Lunar New Year holiday next year.

The economists expected China’s US dollar-denominated exports to average 11.35 percent growth in November, lower than the 21.1 percent jump announced by the General Administration of Customs today. They predicted imports to rise 5.49 percent, higher than the 4.5 percent increase recorded, with the trade surplus forecast at USD52.3 billion, less than the USD75.4 billion announced today.

The average forecast for the Chinese yuan against the US dollar at the end of the year is 6.56, up from a median 6.5782 on Nov. 30. The economists forecast an average of 6.58 by the end of next year. The yuan has continued to appreciate since November, said Huang Jinhua, an economist with China Mincing Bank. The main drivers are China’s world-leading economic recovery and the intensified opening-up.

There has been a slew of credit debt defaults since November. The current wave will have a short-term impact on markets though the effect on the economy and financial system will be relatively limited, the economists said. As regulators step in to maintain market order the logic of future credit bond investment will be reshaped.

Editor: Peter Thomas