Confidence in China’s Economy Falls in December, Yicai Poll of Chief Economists Shows

A Yicai survey of 14 chief economists dated Dec. 8 shows confidence in China’s economy softened in December with the Chief Economists Confidence Index slipping to 50 from 50.3 in November, leaving the economy in a weak recovery and prompting expectations of continued accommodative policy ahead of the 15th Five-Year Plan. Panel forecasts for November include CPI +0.7% YoY, PPI -2.1% YoY, fixed-asset investment down 2.1% YoY, retail sales +3.1% and industrial production +5%, while trade surprised to the upside with a USD111.7bn surplus as exports rose 5.9%; credit forecasts envisage CNY679.1bn in new yuan loans, CNY2.32tn in new social financing and M2 growth of 8.3%. Economists see only a small chance of near-term adjustments to the loan prime rate or reserve requirement ratio, underscoring a preference for liquidity support rather than tightening.

Analysis

Yicai’s monthly survey of 14 chief economists shows confidence softened in December with the Chief Economists Confidence Index at 50, down from 50.3 in November, placing sentiment exactly on the dividing line between optimism and pessimism. Panelists describe China’s economy as in a weak recovery and expect policy to remain accommodative ahead of the 15th Five-Year Plan.

Economists forecast November macro prints of CPI +0.7% year‑over‑year (versus 0.2% in October) and PPI -2.1% (unchanged), with retail sales +3.1% and industrial production +5.0% while fixed‑asset investment is projected to worsen to -2.1% from -1.7%. Trade data already surprised to the upside with a USD111.7bn surplus and exports up 5.9% YoY, above panel expectations.

Credit and liquidity projections point to continued easing bias: new yuan loans are seen at CNY679.1bn, new social financing at CNY2.32tn and M2 growth of 8.3%. The economists assign only a slight probability to near‑term adjustments in the loan prime rate or reserve requirement ratio, implying policymakers are likely to prefer liquidity support over tightening in the near term.

Key Decisions for Investors

• Position modestly overweight to assets that benefit from continued liquidity and stronger external demand (onshore credit and exporters), given the survey’s lending, social financing and M2 projections,
• Underweight domestic cyclicals reliant on fixed‑asset investment and discretionary consumption because the panel forecasts FAI contraction and only modest retail gains,
• Size positions around the upcoming November releases (CPI, PPI, trade, credit and M2 due Dec. 10+) and be prepared to adjust exposure if data decisively diverges from the panel’s forecasts,
• Maintain tactical hedges or higher cash liquidity because the confidence index sits at the neutrality threshold and economists see only a small chance of rapid policy easing via LPR or RRR cuts