(Yicai Global) Dec. 7 -- Confidence in China’s economy dipped further into negative terrain this month because of uncertainty about the country’s Covid-19 situation in the short term, according to chief economists polled by Yicai Global.

The Yicai Chief Economists Confidence Index for December was 49.43, down from 49.89 in November. A reading below 50 indicates negative sentiment.

Inflation remains moderate, according to the 18 chief economists who took part in the survey. They expect the consumer price index to have climbed 1.65 percent in November from a year earlier, while the producer price index, or factory gate prices, probably fell 1.53 percent.

The slowdown in retail sales of consumer goods is likely to steepen, falling by a predicted 2.09 percent last month after a 0.5 percent dip in October, the economists indicated. Industrial output may have expanded 3.88 percent in November from a year ago, less than October’s 5 percent clip, they said.

Foreign trade will contract from the previous month, according to the experts. Exports are likely to have dropped 1.64 percent, more than October’s 0.3 percent dip, while imports probably tumbled 4.15 percent, much more than October’s 0.7 percent decline. The trade surplus may have shrunk 10.8 percent to USD75.87 billion from October's USD85.15 billion.

There is likely to be much more credit available, the chief economists said. New loans in November are expected to have tallied CNY1.27 trillion (USD180 billion), double the previous month’s CNY615.2 billion (USD88.15 billion), while total social financing probably jumped more than two times to CNY1.96 trillion from CNY910 billion.

China’s central bank will probably trim the reserve requirement ratio for banks again in the future, after a 0.25 percentage point cut on Dec. 5, according to seven of the 11 chief economists who ventured predictions. The others said further cuts are unlikely.

Twelve of the chief economists said the benchmark deposit rate is unlikely to change this month, while the others did not give a forecast. Two respondents said the one-year and five-year loan prime rates might be cut this month.

The Chinese yuan is expected to keep appreciating against the US dollar for the next six months, reaching 7.04 by the end of June 2023 from 7.18 by the end of November, but will then gain ground and end 2023 at 6.74, the economists predicted.

Editor: Kim Taylor