Rising stocks, dim export: economists post new year outlook for China's economy

Special Report:Global Financial Crisis

BEIJING, Jan. 5 (Chinese media) -- Chinese shares rose on

new year's first trading day, raising people's expectations about the country's

economy. Chinese media has collected experts' views on much-talked-about economic

topics here Monday.

The domestic stock market is expected to rebound in

2009 after Waterloo-like condition last year. The benchmark Shanghai Composite

Index tumbled to around 2,000 points by December from its peak at 6,124 in 2007.

Jin Bosong, economist with the Ministry of Commerce

(MOC), said market performance would improve with the country's economy getting

better.

"Massive boost like what we experienced in 2007 is

unlikely, however," said Zhao Xijun, professor of finance at Beijing-based

Renmin University of China, warning investors to be optimistic but cautious.

Both Jin and Zhao expected GDP to grow above 8

percent in 2009 with the 4 trillion yuan (586 billion U.S. dollars) economic

stimulus package and other policies.

As to whether or not the Chinese currency will

further rise against the U.S. dollar, Tan Yaling, expert with the national

association on international economy, said space was limited for the yuan to

further appreciate.

Zhang Yansheng, chief economist under the National

Development and Reform Commission (NDRC), held a similar view. "A rapid yuan

devaluation will lead to trade conflict with the West. A big rise will hurt

domestic enterprises. Either direction is unlikely," he said.

Meanwhile, economists predicted 2009 to be a

difficult year for China's export, which suffered from shrinking overseas demand

last year.

"It will not improve without markets in America,

Europe and Japan recovering," Zhang said.

All the experts said the country would continue

buying U.S. treasury bonds.

"As long as our trade surplus against the United

States remains, China will keep increasing the amount of American bonds it

holds," said Shen Jiru, economic researcher with the Chinese Academy of Social

Sciences.

Tan said a rise in oil price would be inevitable once

the global economy improves. She warned people to be prepared for a sharp spike

in oil prices in 2009, adding "it will drive up prices of cars and houses as

well."

The ongoing financial crisis has aroused much concern

over job and salary cuts. The domestic employment market may be affected if some

international companies are to reduce their presence in China, according to

Zhang with NDRC.

"Large-scale job cuts will not take place if the

governmental measures to stimulate domestic demand make its way," he said.

As to the prospect of the country's 10 million

migrant workers returning to their rural hometowns jobless, Jin with MOC said

they could find jobs again this year as large amount of workers will be needed

in infrastructure constructions across the country.

Professor Zhao further suggested migrant workers to

join skill trainings. "Mere labor may not be enough for companies going through

technology upgrading," he said.