A prominent economist has called for a slight depreciation of the yuan, despite premier Zhu Rongji's repeated insistence on maintaining its value. Addressing an economic conference in Shenzhen at the weekend, Fan Gang said the yuan should be devalued by a small margin, otherwise pressure on the economy would increase. Exports would be hit by shrivelled consumption in Southeast Asian countries, which have suffered sharp currency devaluations. Mr Fang said nearby countries' weaker currencies would also increase their ability to compete with China in manufacturing. That would become evident later this year as those countries resumed production when the currency turmoil eased. China has forecast a sharp fall in export growth this year as a result of changes in the Asian markets. The State Planning Commission expects exports to grow by 10 per cent in 1998, compared to 20 per cent last year. Commenting on the impact of possible devaluation on Hong Kong, Mr Fang said that as long as the Southeast Asian currency question was resolved, the mainland's economy and, in turn, that of Hong Kong would benefit. The Hong Kong dollar would be even more stable as a result, Mr Fang said. Premier Zhu has vowed several times that the value of the yuan will be maintained. But Mr Fang said that China had entered a phase of deflation, during which interest rate cuts and a relaxed grip on the money supply would be beneficial. He said he was impressed by authorities' decision to boost the economy by investing in infrastructure, but said sourcing capital was the key to economic success. Mr Fang added that a complete revamp of state-owned enterprises, retraining for jobless workers and housing reform in favour of private property development would help stimulate the economy.