Xinhua Finance survey shows stabilizing following two months of deterioration as strong production and sales levels counteract the impact of rising interest rates.

Key indexes remain firmly in positive territory in July though some did fall again in July as increasing numbers of respondents reported unchanged conditions rather than any renewed deterioration. Strong sales-related indexes pointed to a favorable operating environment, though an increasing number of respondents complained that rising costs - including the yuan exchange rate - are taking their toll as fierce market competition impacts their price traction.

The monthly survey was conducted July 9-24 and comes amid rising interest rates and other measures imposed by the government to slow what some say is an overheating economy. Since its inception in January, 2005, the survey has accurately tracked and predicted overall Chinese economic conditions, providing important intelligence ahead of government data. The survey has been especially important in indicating turnarounds in the economy, such as last summer's slowdown or the pickup in activity seen since last fall.