China's economy may have done well in August but outlook remains grim

Economists expect the Chinese yuan to continue to weaken, even after the onshore and offshore yuan both fell to their lowest levels since July 2020 last week.

, economists are standing by their pessimism.

"While some of the current policy support will bear more fruit in Q4, the Covid situation will likely remain challenging into the winter and early 2023, and export growth is set to slow," UBS chief China economist Tao Wang said in the note. But those restrictions have dragged down investor sentiment and that's unlikely to rebound any time soon, Mattie Bekink, China director for the Economist Intelligence Corporate Network, said ­­on CNBC's "Squawk Box Asia."

Commenting on sporadic regional lockdowns across China, she said, "It's kind of a chokehold on China's economy at the moment.""We expect CNY weakness to persist in the near-term, underpinned partly by broad USD strength," Goldman Sachs economists said in a note, adding the next key level to watch is 7.20, which was last tested in May 2020.

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