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China will not see post-Olympic downturn-adviser

BEIJING, July 31 (Reuters) - China’s property and stock markets will not suffer a post-Olympic hangover because prices have already experienced a steep correction, a central bank adviser said in remarks published on Thursday.

“Adjustments in the stock market, the housing market and energy prices have all already happened. I think the correction has almost finished by now and (prices) might trend up in the future,” Fan Gang, a member of the central bank’s monetary policy committee, told Xinmin Weekly.

The Shanghai stock market .SSEC has lost more than half of its value since hitting a record last October, while property prices in some markets, notably Shenzhen, have fallen hard as a result of a credit squeeze orchestrated by the central bank.

“We needn’t worry about the post-Olympic economy at all. How could (stock) prices drop any further?” Fan asked.

Even without the stimulus of spending for the Olympic Games, which start next Friday, China’s massive infrastructure needs would remain a driver of economic growth, said Fan, who holds the academic seat on the committee.

Beijing’s fixed-asset investment volume accounts for only about 2.9 percent of the national total, he said.

Turning to the yuan, Fan said a gradually rising currency is in China’s best interests despite the challenges it poses.

It would be hard for China to carry out another one-off appreciation, similar to the 2.1 percent revaluation in July 2005, as there is no consensus on the yuan’s equilibrium rate, he said.

Even though the yuan's CNY=CFXS steady appreciation is generating a lot of liquidity and is attracting speculative capital, Beijing does not have a better policy alternative, Fan said.

China cannot afford to stop the yuan rising as the dollar is in a downtrend, he added. (Reporting by Eadie Chen; Editing by Alan Wheatley) (eadie.chen@reuters.com; +8610 6627 1268; Reuters Messaging: eadie.chen.reuters.com@reuters.net))

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