But it's less likely for the country to boost exports by depreciating the renminbi, because a fickle foreign exchange policy hurts the economy. Moreover, the country's export boom in the past years occurred not because of the currency, but because inexpensive and good-quality products were manufactured using cheap labor and natural resources. As a result, exporters should now further increase the output of their value-added products to sharpen their competitive edge. The renminbi will largely move in line with changes in the strength of the U.S. dollar.

More alarmingly, the country's trade surplus hit a record high in November 2008, which may not necessarily be a boon for the country, which is currently engaged in rebalancing its growth model. The ever-expanding trade surplus may prompt policy-makers to place less weight on the role of domestic demand and stoke trade friction. As a result, the trade imbalance should be redressed for a healthier economy.

In striking contrast to bleak export prospects, domestic demand will remain relatively buoyant in 2009 and pump steam into the economy. More supportive measures are on the way to further enliven the consumer markets, such as raising the thresholds for levying income tax and heavier subsidies for low-income households. More importantly, the social insurance system needs to be improved as well. Otherwise, people would continue to save money instead of using it for shopping, however quickly their incomes surge.

I do not think the Asian emerging markets will be hit hard by the financial storm. Since the 1997 Asian financial crisis, Asian countries have strengthened their financial defenses with ample foreign exchange reserves and strong fiscal capacities. Their brisk demand for Chinese goods will bring a measure of calm to Chinese exporters.

(Zhuang Jian is a senior economist at the Asian Development Bank.)

Zhang Liqun: China should pay attention to three slowdowns

The performance of the Chinese economy in 2009 will highly depend on policy adjustments, but we should pay more attention to the following aspects:

First, consumption demand and the upgrading of the consumption structure may slow down.

Affected by the weak stock market, the growth of people's property income will slow down. Increasing difficulties faced by enterprises and rising labor costs will affect the growth of employment and people's incomes. Considering changes in demands for home purchases as well as factors that may influence households' demands for car purchases, we should pay close attention to the problems of slowdowns in consumption demand growth and the upgrading of the consumption structure.

Second, real estate investment and corporate investment may slow down.

In 2008, both the year-on-year and month-on-month growth rates of the housing price index in urban areas declined, and in some megacities like Shenzhen, housing prices even experienced marked drops. This change has aroused common downward expectations, leading to a drop in housing sales. Judging from the relationship between supply and demand in the present real estate market, this tendency is expected to further deteriorate. Though the overly rapid price hikes in real estate have brought about many serious problems which must be curbed, we still need to prevent the possibility of drastic falls after sharp rises. If only regulated by the market, the real estate market will continue to be sluggish. Together with the factors such as tighter loan policies, more and more real estate companies may suffer from broken capital chains, and the real estate industry will enter a period of seasonal adjustment. Since the construction phase for real estate lasts as long as five years, the adjustment will last a long time once it begins. Such a situation will inevitably affect the growth of real estate investment.

The production costs of enterprises have increased markedly owing to factors such as price hikes in capital goods, rising labor costs, financing difficulties and increasing financing costs, as well as the rising expenses of energy conservation and pollution control. On the other hand, with a slowdown in total demand growth, market competition will become increasingly fierce, and enterprises will have limited room to increase product prices to transfer the pressure of rising costs. In 2008, attempts to raise the prices of home appliances and cars were not successful in the end; and on the contrary, prices dropped under fierce competition. Considering the above two factors, enterprises will face serious difficulties, which may affect their abilities to invest and may block the further growth of corporate investment.

The regulations on investment in recent years have mainly controlled government-led investment, so that the growth of investment mainly depends on market-led investment. Real estate investment and corporate investment are the chief contributors to market-led investment, among which real estate investment accounts for one fifth of total fixed asset investment. The decline of real estate investment and corporate investment is expected to produce a noticeable effect on total investment growth; hence in 2009, the growth of investment may drop remarkably.

Third, the growth of foreign trade and exports may further decrease.

Affected by the financial turmoil, the U.S. real economy will turn sluggish in 2009. The problems of employment and income growth will further deteriorate, and market demand will continue to slacken. Influenced by troubles in the United States, the economies of the EU and Japan are also expected to slacken, and the fatigue will probably come earlier than it did in the United States; hence, demand on the international market will be further weakened. Owing to expanded budget deficits in the United States, the U.S. dollar may continue to weaken. All these will impose an adverse impact on Chinese exports. Going through various changes in 2008, Chinese export companies have begun upgrading their industrial structures and have made some achievements. However, export companies still face many difficulties. If international demand continues to shrink and the renminbi continues to appreciate, it is estimated that exports will be restrained severely. Considering the above factors, export growth will further slow down in 2009.

(Zhang Liqun is a research fellow with the Macro-Economy Research Department, Development Research Center of the State Council.)

Zuo Xiaolei: The economic correction offers an opportunity for China to accelerate industrial upgrading

China is well-positioned to maintain at least 8-percent growth in 2009 despite various worrisome factors that are colluding to put the economy on a rockier foundation. Although there will be some lag before the stimulus effect of government spending works through the economy, the stimulus plan is set to reverse the rapidly souring business mood and unleash domestic demand. But now it is unnecessary to try to push the economy back to the double-digit growth enjoyed in past years since the economic adjustment will be a boon for the country in terms of industrial upgrading and economic rebalancing.

The government spending plan should play a bigger role in luring more private investment to fuel growth. For example, the Central Government can allow more private investors to take part in massive construction projects either as outsourcers or partners. But we cannot rely any more on investment to drive up growth since it already accounts for a considerably large portion of the economy. Excess investment in the past has led the country to count on exports to digest the overcapacity of industries, which has turned out to be a shaky growth model. As a result, the investment level must be reasonable and controllable.

On the consumption front, more efforts are needed to improve social systems as incentives for citizens to spend, such as the social insurance system, income distribution system and medicare system. Meanwhile, we should also push for a thriving service industry in the areas of entertainment, tourism and physical fitness, which can help revive the consumer market.

In the process of encouraging consumption, the rural market is key. China's 700-million farmers actually have a stronger will and ability to spend than estimated, as long as their incomes increase. It, therefore, is imperative that the government continuously improves the livelihoods of farmers by further raising the minimum grain purchase prices and disbursing heavier subsidies. Only a sustainable rural revitalization drive can be instrumental in rebuilding the confidence of rural consumers, thus curing the ailments of the Chinese economy at their roots.

The economic correction also offers an opportunity for the country to accelerate its industrial restructuring. Enterprises should secure a firm market foothold by upgrading their products and optimizing their growth models instead of expanding blindly.

The broader economy is likely to bottom out in mid-2009 when the aggressive fiscal stimulus starts to take effect and creates conditions for enterprises to recover their lost ground.

(Zuo Xiaolei is Chief Economist of China Galaxy Securities Co. Ltd.)

Zhao Xijun: Investor confidence is key

The economic development trend will be very complicated in 2009. The

government's 4-trillion-yuan ($586 billion) stimulus package will play a big role in stabilizing the mainland economy.

This year will be the most difficult one during this round of economic downturn. Three major economies-the United States, EU and Japan-are falling into a recession with other economies coming down with them at the same time.