Economists' take

The impact of the bad weather (in late January) will be temporary and the reconstruction will create new demand.

It is reasonable to believe that last year was the peak of this round of strong growth. Based on previous experience, there may be a lag in inflationary growth. Inflation may peak two years later.

- Xu Xianchun, deputy head of NBS

The downturn trend started actually not from this year, but from the second half of last year. In June, there was an obvious downturn. Investment peaked and in the middle of the 2006-10 period, the US economic bubbles burst, which affected China's exports. China's investment demand and exports slowed, which is an obvious downward trend.

- Wang Jian, general secretary, China Macroeconomic Society

Although China's economic growth is expected to slow this year, it does not indicate that the economy will

slide into a downward cycle. Although easing exports will have a considerable impact on economic growth, China boasts strong domestic demand, including stable growth in investment and consumption. Consumption growth is pretty stable. Liquidity is ample, which has not changed much despite previous rounds of macroeconomic regulations or monetary tightening. We forecast China's trade surplus could still reach $260 billion this year and its foreign exchange reserve could increase by $400 billion.

- Wang Tao, head of Economics & Strategy of Bank of America, Greater China

China may have entered an inflation cycle. I think this year inflation may not be lower than 5 percent. The problem of excess liquidity remains and grain prices are not stable.

- Zhang Shuguang, chairman, Unirule Institute of Economics

International grain prices have surged strongly, which is very troubling. We suggest that monetary policy

should play a role (in stabilizing the economy), with quantitative measures taken more frequently. In our report in February, we suggested that one or two interest rate hikes be made to curb inflation. We also suggested that as the US economy slows down, China's fiscal policy should be made readily available. If the impact of slowing US economy is substantial, we should relax fiscal policies to help anchor the economy.

- Yuan Yuedong, economist with Global Financial Market, Bank of China

We think the US is experiencing a recession, which may last until the end of this year. In July and August, if no measures are taken, serious problems may occur (in the Chinese economy) due to yuan revaluation, plus a series of export rebate cuts and the new labor contract law. The new law has really made a serious impact on the economy.

- Zhu Jianfang, chief economist of CITIC Securities

China's exports will definitely slow, but will still be strong. On the whole, the US economic slowdown

could reduce 1 percentage point of China's GDP growth.

- Shen Minggao, senior economist with Citigroup in Beijing

Consumption is actually a pillar of stabilizing the Chinese economy. We think that this year, the

world economy may slow by 0.7-0.8 percentage point and its impact on the Chinese economy may be similar. We should also not neglect the role of the provincial leadership reshuffle this year in pushing investment, which can to an extent offset the impact of decreasing export-oriented investments. We think investment growth will slow to about 23 percent this year.

- Li Huiyong, senior macroeconomic analyst at Shenyin and Wanguo Securities

I think exports will maintain a high growth rate this year, roughly 25 percent. Although the yuan

appreciation process may accelerate this year, its impact may fully unfold next year. Investment will increase by more than 20 percent.

- Pan Xiangdong, chief macroeconomic analyst at China Securities

Popular opinion has it that the yuan should appreciate faster to curb fast price rises and some

hold that once the yuan is allowed to fluctuate freely, all problems will be solved. I disagree. Exchange rate policy, in terms of its nature, will have some bearing on inflation, but its main function is not to deal with inflation. Sharp yuan revaluation will have great bearing on foreign trade sectors. Export-oriented enterprises are facing pressure from yuan appreciation, rising costs, reduced export tax rebates and rising interest rates.

- Lian Ping, chief economist at Bank of Communications

Personally, I think the current monetary policy should still be tight, but the level of tightening could be varied in different periods and circumstances. I believe our policymakers will handle this properly.

Meanwhile, we should not overreact to new changes. The US crisis is serious and the impact of its real

estate bubble bursting is yet to fully surface. It may have a serious impact on the US economy and that of major developed countries. However, on the one hand, the joint measures by the US government, the Federal Reserve and other governments of developed economies might be effective and recession could be avoided. On the other hand, China's exports to the US have declined to below 20 percent. If Asian economies and oil-producing countries (who account for about half of China's exports) can perform well, China's foreign demand will not change much.

- Fan Gang, member of the monetary policy committee of the People's Bank of China

(China Daily 03/10/2008 page3)