In a survey of 22 economists in Asia, Europe and North America taken over the past two days, 11 forecast the yuan would be devalued between now and the end of 2000, while another six thought a devaluation was likely or at least possible.

Only five said such a move wouldn't happen or was unlikely.

Chinese officials repeatedly have said there is no reason to wrench the yuan from its target level of 8.28 per US dollar, but analysts and traders had remained unconvinced.

None of those surveyed expected Chinese authorities to allow a devaluation in the first several months of this year. Most were betting on a devaluation in the latter half of 1999 or in 2000.

"The key thing is how the external environment shapes up and how China's exports perform... Ultimately, they are aware that they've invested a lot of political good will (inkeeping the yuan stable) and they wouldn't want to erode that in a hurry," said Gerard Teo, regional economist at ABN Amro Bank in Singapore.

Trade was the key issue. Those economists expecting a devaluation generally were of the view that Beijing would weaken the yuan to improve its export competitiveness and attract foreign investment.

"We expect the Chinese to adjust the yuan lower on a one-off basis," said Rob Podorefsky, currency strategist at BankBoston.

"This step would be taken in a pro-active manner to regain regional competitiveness and to pave the way for greater globalisation of China's financial markets," he said.

Of the 20 economists who described how China would devalue, 12 thought China would maintain a managed float at wider bands, while eight said any weakening would be accomplished with a one-off devaluation. Forecasts for a one-time devaluation ranged between seven and 20 per cent.

Friedrich Wu, vice president for economic research at DBS Bank in Singapore, said China also wouldbe eyeing foreign investment.

"They are more concerned about attracting FDI. The currency is an issue because it has not devalued like other Asian currencies, which means that China's operating costs could be higher," he said.

Those forecasting a steady rate said devaluing the currency would annoy China's trade partners, notably the United States, and would have little effect on export growth besides.

"No matter what happens, China will remain in surplus in the next two years," said Kevin Chan, head of China research at Nomura International in Hong Kong.

Moreover, said Chan, whatever problems China has in its export sector are the result of weaker demand due to the global economic slowdown rather than a loss of competitiveness.

China's 1998 trade surplus, US$48.59 billion, was up 7.9 per cent on the previous year's. Exports edged up 0.5 per cent, while imports fell 1.5 per cent.

Export growth in 1998 was the slowest since 1983. In 1997, exports surged 20.9 per cent.

On Wednesday, People's Bankof China governor Dai Xianglong said the currency would be devalued only when there was a great imbalance in the country's balance of payments.

Chi Lo, director of China research at HSBC in Hong Kong, said economic fundamentals actually favoured a stronger yuan.

"We are still projecting a balance of payments surplus for China for the next few years, which means that market forces will actually push up the renminbi's (yuan) exchange rate instead of pushing it down," he said.