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I. Confidence Index: The confidence index for August stands at 50.3. Cheng Shi from ICBC International believes that, considering the Q2 GDP growth of 4.7%, which is lower than the 5.3% in Q1, and the overall H1 growth of 5.0%, which is basically in line with the annual growth target of around 5.0%, the economic recovery and positive trend remain unchanged. As proposed in the Third Plenum communique with the phrase "enhance the consistency of macroeconomic policy orientation," it is expected that various economic policies will continue to coordinate and work in synergy within the year, balancing short-term stability and long-term development. On one hand, structural adjustment will be the key to the synergistic effect of various economic policies, complementing each other with total volume efforts. On the other hand, economic policies will be anchored by long-term goals, further alleviating frictions between the short and long term, and avoiding economic fluctuations amplified by shifts in short-term policies.

Lian Ping from the Chief Industry Research Institute of Guangkai stated that in the second half of the year, exports, consumption, and investment will maintain steady growth, especially with manufacturing investment growing rapidly, offsetting the high-speed decline in real estate investment. Factors such as export growth, sci-tech innovation policies, equipment renewal, replacement of old with new, and financial support will promote the continued rapid growth of the manufacturing industry. Manufacturing production and investment will be the biggest highlights of the economy in the second half of the year. The risk in the real estate industry is the biggest risk in the short to medium term of economic operation, and this round of adjustment may be a major adjustment to the real estate market that has been overheating for decades.

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Wang Han from Xingye Securities indicated that, looking at the trend of various economic indicators in Q2, exports continued the upward repair trend, and the investment side also maintained a certain resilience due to the demand for equipment renewal and the high-end transformation of the manufacturing industry. However, consumption is facing significant repair pressure due to the slowdown in economic repair momentum and weakening consumer confidence. Looking ahead, external demand still has room for repair under the global manufacturing recovery and the expected rise in Federal Reserve interest rate cuts, but it is necessary to pay attention to the rising "headwind" factors brought by overseas elections and geopolitical situations. For domestic demand, the weak consumption momentum is the core contradiction of the current economic repair, and insufficient confidence in the entity remains the main crux of the current insufficient effective demand and supply-demand mismatch. In addition to paying attention to the stimulation of demand by policies such as equipment renewal and the replacement of old consumer goods, attention should also be paid to policies that protect consumer confidence and corporate investment confidence, such as ensuring people's livelihoods, maintaining employment, and tax system reform.

II. Prices: The predicted average value for July CPI is 0.35%, and for PPI, it is -0.81%. Economists predict an average year-on-year growth rate for July CPI of 0.35%, which is 0.15 percentage points higher than the 0.2% announced by the Bureau of Statistics last month. Among them, the highest forecast of 0.5% was given by Zhou Xue from Mizuho Securities, Chen Xing from Caitong Securities, Wu Ge from Changjiang Securities, and Ding Shuang from Standard Chartered Bank. The lowest forecast of 0.1% was given by Lian Ping from the Chief Industry Research Institute of Guangkai and Lu Ting from Nomura Securities.

The predicted average year-on-year growth rate for July PPI is -0.81%, slightly lower than the value of -0.8% announced by the Bureau of Statistics last month. The highest forecast is -0.5%, from Xie Yaxuan from China Merchants Securities; the lowest is -1.1%, from Zhou Xue from Mizuho Securities.

Lu Zhengzhi from Industrial Bank believes that in terms of industrial products, the overall price of industrial products fell in July. The crude oil price increased by 3.2% month-on-month in July, driven by a slight rebound in oil prices due to the peak demand season and unexpected inventory reduction. The terminal demand still needs to be stimulated, and the prices of black series commodities continued to fall, with rebar, iron ore, and coke increasing by -2.9%, -0.4%, and -1.3% month-on-month, respectively. The prices of non-ferrous metals continued to decline, with copper and aluminum increasing by -1.8% and -4.4% month-on-month, respectively. Overall, it is expected that the July PPI will record a year-on-year decrease of -0.8%. In terms of consumer goods, the overall price of major consumer goods operated stably in July. The price of live pigs continued to rebound slightly, but the rebound strength has obviously slowed down, with a month-on-month increase of 1.6% in July; the price of fresh vegetables rebounded seasonally with the continuous high temperature, with a month-on-month increase of 8.8%. The price of gasoline rebounded slightly with the international oil price, with a month-on-month increase of 0.1%. Overall, the CPI reading continues to operate at a low and stable level, and it is expected that the July CPI will record a year-on-year increase of 0.3%.

III. Total Retail Sales of Consumer Goods: The predicted average value for July is 2.99%. The predicted average year-on-year growth rate for the total retail sales of consumer goods in July is 2.99%. Among them, the highest forecast of 7.2% comes from Chen Xing from Caitong Securities, and the lowest forecast of 2% comes from Xie Yaxuan from China Merchants Securities.Caitong Securities' Chen Xing believes that, looking at the consumption of automobiles, which accounts for the largest share of optional consumption, the retail sales volume of passenger cars by the China Passenger Car Association in the first 21 days of July turned positive from negative to a 1% year-on-year increase. This may be due to the higher enthusiasm for summer travel, coupled with the promotion of private car scrapping and renewal subsidy policies, leading to a continuous acceleration in the release of car purchase demand. As the summer vacation season begins, residents have a strong desire to travel, and with the implementation of consumer promotion policies and the innovative expansion of consumption scenarios, consumption is expected to be boosted. Considering the lower base of the same period last year, it is expected that the total retail sales of social consumer goods in July will rise to a year-on-year increase of 7.2%.

IV. Industrial Value Added: The forecast average for July is 5.27%

Survey results show that the forecast average for the year-on-year growth rate of industrial value added in July is 5.27%, among which, Standard Chartered Bank's Ding Shuang gave the minimum value of 4.5%, and Industrial Bank's Lu Zhengwei gave the maximum value of 6%.

Minsheng Bank's Wen Bin believes that the official manufacturing PMI in July fell by 0.1 percentage points to 49.4%. Among them, the production index fell by 0.5 percentage points to 50.1%, the new order index fell by 0.2 percentage points to 49.3%, and the new export order index rose by 0.2 percentage points to 48.5%. Production is still expanding, but the pace has obviously slowed down. External demand is stronger than internal demand, but the overall demand is relatively weak. Looking at several high-frequency data on the commencement rate, the average commencement rate for full-steel tires used in heavy trucks in July fell slightly by 1.4 percentage points to 57%, and the commencement rate for semi-steel tires used in passenger cars rose slightly by 0.5 percentage points to 79.2%. The blast furnace commencement rate is basically the same as last month, the methanol commencement rate has fallen, but the PTA and PX commencement rates have risen. Overall, the commencement rate is still relatively weak. He expects that the industrial value added in July will fall slightly on a month-on-month basis.

V. Fixed Asset Investment Growth Rate: The forecast average for July is 3.85%

Economists' forecast average for the growth rate of fixed asset investment in July is 3.85%, slightly lower than the announced data of 3.9% for the previous month, among which, Galaxy Securities' Zhang Jun, KPMG's Cai Wei, and ICBC International's Cheng Shi gave the highest value of 4%, and Changjiang Securities' Wu Ge gave the lowest value of 3.5%.

Caitong Securities' Chen Xing believes that the cumulative year-on-year growth rate of fixed asset investment in June slightly fell to 3.9%. Looking at the three major types of investment, the cumulative year-on-year growth rates of manufacturing and infrastructure investment both slowed down, while the cumulative year-on-year growth rate of real estate investment stabilized. It is expected that the investment growth rate in July may remain stable: first, the progress of special bond issuance in July is relatively slow. Looking at the high-frequency data related to infrastructure, the year-on-year growth rate decline of the commencement rate of petroleum asphalt has narrowed slightly, and infrastructure investment may fall slightly; second, with the continuous optimization of real estate control policies in various regions, real estate investment may stabilize at a low level; finally, with the support of policies promoting large-scale equipment renewal, the growth rate of manufacturing investment may remain stable. He expects that the cumulative year-on-year growth rate of fixed asset investment in July may stabilize at 3.9%.

VI. Real Estate Development Investment: The forecast average for July is -10.11%

Survey results show that the forecast average for the cumulative growth rate of real estate development investment in July is -10.11%. Among the economists participating in the survey, Caitong Securities' Chen Xing, Minsheng Bank's Wen Bin, ICBC International's Cheng Shi, and Xingye Securities' Wang Han gave the highest value of -10%, and Galaxy Securities' Zhang Jun gave the lowest value of -10.3%.

Industrial Bank's Lu Zhengwei stated that in terms of real estate investment, the average daily sales area of commercial housing in 30 cities in July fell by 24.6% month-on-month, slightly narrowing by 1.8 percentage points from the previous month to 17.5%, while indicators such as building steel and rebar continued to weaken, indicating that real estate investment will continue to face pressure.Seven, Foreign Trade: The trade surplus for July was announced at $84.65 billion.

Data released by the General Administration of Customs on August 7th shows that in July, China's export growth rate year-on-year was 7%, and the import growth rate year-on-year was 7.2%. The trade balance for July was $84.65 billion, which is lower than the predicted average of $97.402 billion by chief economists.

Wen Bin from Minsheng Bank stated that in terms of freight rates, in July, the Baltic Dry Index (BDI) remained flat month-on-month and increased by 85.1% year-on-year. China's export container freight index rose by 152.6% and 13.4% respectively month-on-month and year-on-year. The continued tight capacity, coupled with strong demand, has kept shipping prices high. Regarding external demand, the US ISM Manufacturing PMI fell from 48.5% to 46.8% in July, with weak inventory replenishment. The Eurozone Manufacturing PMI remained flat at 45.6% month-on-month, showing signs of stabilization. South Korea's exports in July grew by 13.9% year-on-year, indicating that the global semiconductor industry remains highly prosperous, which is beneficial for China's electronic product exports; Vietnam's Manufacturing PMI remained at 54.7%, with exports reaching a new high for the year, increasing to 21% year-on-year, which is favorable for China's raw material and intermediate goods exports. In terms of prosperity indicators, China's manufacturing new export orders PMI for July increased by 0.2 percentage points month-on-month to 48.5%, and the import order index increased by 0.1 percentage points month-on-month to 47%, indicating that the trade amount may rise slightly month-on-month. Regarding commodity prices, the CRB spot index in July decreased by 5.5% and 0.8% respectively year-on-year and month-on-month, with prices continuing to correct. In addition, the low base of the same period last year, with export and import growth rates of -14.3% and -12.2% respectively, is conducive to driving the year-on-year growth rate in July of this year. Taking into account the above factors, he expects that both imports and exports in July will grow positively year-on-year.

Eight, New Loans: The forecast average for July is 609.636 billion yuan.

Economists predict that new loans in July will decrease from the previously announced value of 2130 billion yuan to an average forecast of 609.636 billion yuan. The minimum value of 400 billion yuan comes from Chen Xing of Caitong Securities, Wang Han of Xingye Securities, and Lu Zhengwei of Industrial Bank, and the maximum value of 1370 billion yuan comes from Ding Shuang of Standard Chartered Bank.

Nine, Total Social Financing: The forecast average for July is 1.18 trillion yuan.

The forecast average for total social financing in July is 1.18 trillion yuan, down from the 3.3 trillion yuan announced by the central bank in June. Among them, Ding Shuang of Standard Chartered Bank gave the maximum forecast value of 1.94 trillion yuan, and Lu Ting of Nomura Securities gave the minimum value of 0.752 trillion yuan.

Lu Zhengwei from Industrial Bank believes that in terms of social financing, there may be a slight rebound in the growth rate of social financing in July. Looking at government bonds, the net financing scale of local bonds in July further narrowed compared to the previous month, dragging down the scale of government bonds. However, due to the low base of the same period last year, government bonds may still achieve more year-on-year growth this month. Combining the credit scale, the new social financing in July is expected to be 0.86 trillion yuan, with a corresponding year-on-year growth rate of social financing of 8.2%.

Ten, M2: The forecast average growth rate for July is 6.3%.

Economists predict that the year-on-year growth rate of M2 in July will rise to 6.3% from the 6.2% announced by the central bank in June. Among them, Lian Ping from the Guangkai Chief Industry Research Institute gave the maximum value of 7%, and Lu Ting from Nomura International gave the minimum value of 5.9%.Galaxy Securities' Zhang Jun stated that according to the M2 derivation forecast, in July, credit derivation is approximately 660 billion yuan, fiscal net injection derivation is about -288.2 billion yuan, foreign exchange derivation is approximately -5.85 billion yuan, and bank purchases of corporate bonds derivation is about -100 billion yuan. At the same time, deposits are flowing into wealth management, with the scale possibly around 1.1 trillion yuan. He anticipates that in July, M2 may decrease by about 890 billion yuan, compared to a decrease of about 1.9 trillion yuan in the same period last year, with the M2 growth rate rebounding.

Eleven, Interest Rates & Reserve Requirement Ratio: Small Possibility for LPR Changes in August

Economists generally believe that the likelihood of further reductions in the deposit benchmark interest rate and the one-year and five-year LPR rates in the next month is small. Except for two economists, the other eight economists also expect that the possibility of changes in the reserve requirement ratio for large financial institutions during the same period is also small.

KPMG's Cai Wei stated that the next phase of monetary policy is expected to continue with a prudent and slightly loose overall tone, adhering to the "I am the main" principle, balancing multiple goals such as economic growth and price stability, as well as the overseas policy environment. There may be continued reserve requirement ratio cuts and interest rate reductions. As expectations for a Federal Reserve rate cut intensify, the exchange rate factor's constraint on monetary policy is expected to ease, further opening up the monetary policy space. In addition, the third quarter is a peak period for government bond supply, and to support active fiscal policy, there is a need for reserve requirement ratio cuts to release medium and long-term liquidity. Structural monetary policy tools will continue to adhere to the basic principles of "focusing on key points, reasonable moderation, and advancing and retreating," and may enrich the monetary policy toolkit by supplementing the quotas of existing tools and creating new policy tools in a timely manner.

Twelve, Exchange Rate: The Expected Average Midpoint for the Renminbi against the US Dollar by Year-End is 7.03

On July 31, the midpoint rate of the Renminbi against the US Dollar was 7.1346 yuan. Economists expect that in August, the Renminbi exchange rate will be stable with a slight increase. Their average forecast for the midpoint rate at the end of August is 7.11, and the expectation for the Renminbi against the US Dollar exchange rate by year-end has been adjusted from 7.05 at the end of the last month to 7.03.

China Merchants Securities' Xie Yaxuan stated that under the current external situation of rising uncertainty in the global financial market and the US Dollar index maintaining strength, the Renminbi exchange rate has shown relatively strong resilience. Since 2024, the Renminbi has appreciated and depreciated against major currencies, with a stable and slightly increasing trend against a basket of currencies, and exchange rate expectations have become more stable.

Thirteen, Official Foreign Exchange Reserves: The Predicted Average at the End of July is $3.246478 Trillion

Economists' average forecast for the official foreign exchange reserves at the end of July is $3.246478 trillion, higher than the published data of $3.23 trillion for the previous month.

Minsheng Bank's Wen Bin believes that in July, the mixed economic data from the United States, the dovish signals released by the Federal Reserve's interest rate meeting, and the almost certain rate cut in September, combined with the Bank of Japan's announcement of an interest rate hike and a reduction in government bond purchases, have pushed the US Dollar index lower, with government bond prices rising across the board and stock prices fluctuating. Considering the impact of exchange rate adjustments and changes in asset prices, it is expected that the foreign reserves at the end of July will have increased by $20 billion from the end of the previous month to $3.2423 trillion.Fourteen, Policy

Lian Ping from the Guangkai Chief Industry Research Institute believes that there is still room for macroeconomic policy to exert its strength. In the second half of the year, fiscal policy will continue to maintain a reasonable expansionary effort, increasing fiscal investment in advanced manufacturing and livelihood areas; the issuance of 16 batches of ultra-long-term special government bonds will be orderly promoted, with a total scale expected to be no less than 720 billion yuan; the third quarter will see a peak in the issuance of local special bonds. Monetary policy will continue to make good use of total and price tools, and it is expected that the second reserve requirement ratio cut within the year may occur at the beginning of the third quarter. The focus of structural monetary policy tools is to increase the quota of maturing special re-lending and promote the implementation of new tool projects.

Chen Xing from Caitong Securities stated that the actual GDP growth rate in the second quarter fell back to 4.7% year-on-year, which is lower than market expectations, and the main drag is still the slowdown in domestic demand. Among them, the decline in consumption, especially service consumption, is not small. The solution is for macroeconomic policy to continue to exert effort and be more effective, to implement existing policies and to prepare and introduce a batch of incremental policy measures in a timely manner, expecting policy to continue to intensify in the second half of the year. This year's fiscal policy pace is relatively slow, and the subsequent general fiscal expenditure is expected to accelerate, with more inclination towards livelihood areas.

Fifteen, Macroeconomic Hot Issues

The communique of the Third Plenary Session of the 20th Central Committee shows that the next five years will be a period for China to comprehensively deepen reforms. In this survey, economists analyzed the most critical reform points in the economic aspect for the future.

Cai Wei from KPMG believes that in the process of building a Chinese-style modernization, in the economic aspect, attention should be paid to the following three aspects: First, emphasize fairness and efficiency, and boost the confidence of the private economy. Second, firmly grasp the primary task of high-quality development, highlighting technology orientation. Third, promote high-level opening up to the outside world and expand institutional opening up.

Li Wenlong from the Huanya Digital Economy Research Institute stated that the plenary session mentioned the need to "unswervingly encourage, support, and guide the development of the non-public sector of the economy," which provides a more solid direction for the development of the non-public economy and is also the key to the high-quality and stable development of China's economy in the future. In the future, it is necessary to accelerate the implementation of relevant measures to ensure that various forms of ownership can use production factors equally according to the law, participate fairly in market competition, and receive equal legal protection.

Cheng Shi from ICBC International stated that the communique proposed that Chinese-style modernization is continuously promoted in the process of reform and opening up, and will also open up broad prospects in the process of reform and opening up. The key reform points in the economic aspect can be dialectically understood from three dimensions: First, more effective resource allocation. Second, a higher level of opening up to the outside world. Third, a more confident Chinese characteristic.