With the Japanese currency scraping eight-year lows, financial market participants are concerned China might feel stronger pressure to devalue the yuan, they said.

Joint intervention by Japan and the United States in mid-June temporarily eased pressure on China, but even if they do so again, such action is not seen as an instant remedy to soothe the situation in China, they said.

"It's not unthinkable, but I doubt that the United States and Japan will act jointly in the forex market to ease pressure on the yuan," a senior Japanese bank dealer said.

"Intervention may help boost the yen, but to what extent a higher yen can be effective for the yuan is not known. China has its own problems that are pressuring its currency," he added.

China has repeatedly said it is determined not todevalue the yuan, but growing concerns have depressed Asian financial markets since last week.

Liu Mingkang, deputy governor of the central bank, the People's Bank of China, said on Tuesday: "The renminbi (yuan) does not need to be devalued and will not be devalued."

Daisuke Hiratsuka, deputy head of the econometric analysis and forecasting division at the Institute of Developing Economies said a devaluation of the yuan was highly unlikely.

"China is pretty much aware what the consequences will be after devaluation, following the results of devaluation in south-east Asia last year," Hiratsuka said. "I doubt that China will rush to devalue its currency soon."

He added: "Intervention to help the yuan is also unlikely. There is no clear evidence that a stronger yen would definitely improve the situation in China. Another question is whether the US would allow the dollar to depreciate sharply."

The US Federal Reserve and the Bank of Japan stepped into the currency market just before Chinese presidentJiang Zemin's visit to the United States in June. But with the US stock market recently unstable, and Japan unclear on how it will solve its banks' bad loan problems, there is no clear reason for the two countries to jointly intervene in the forex market again, they said.

With the yuan facing speculative attack, China has defended the currency but may have little choice but to devalue to stimulate its economy, analysts said.

China's economic growth slowed to an official seven per cent year-on-year in the first half of 1998, its lowest rate since 1991. Analysts said growth has to pick up dramatically in the second half of the year in order to achieve the country's annual growth target of eight per cent.

They said China's slowing growth could raise unemployment at state-owned firms and eventually push it into recession in the next year.

Beijing may also want Japan to improve its economy through stronger exports, so China can in turn bolster its exports to a revived Japan market, analysts said.

Lastweek, China's parliament Chief Li Peng urged Japan's prime minister Keizo Obuchi and his new cabinet to ease pressure on China by invigorating the Japanese economy.

On Wednesday, China's official Economic Information Daily urged the United States and Japan to support the yen and help Asia avert a new round of economic crises.

"The United States and Japan should adopt resolute actions to stop the downward trend of the Japanese yen to help some Asian countries navigate out of troubled water," the newspaper said.

The yen's movement is being closely monitored by the market to determine the fate of the yuan, but it will be up to Beijing to make the final decision, dealers said.

"I think the yen's fluctuation will not have an influence on the yuan. If China wants to devalue, I think they wouldn't care where the yen stands. The country will simply do it (devalue the yuan) based on its own decision," said Mitsuru Saito, deputy general manager at Sanwa Bank's treasury section.

Hirofumi Ushikoshi, senioreconomist at NRI Research Institute, said: "I think devaluation is the best alternative for China to stimulate its economy, and there is growing demand to do so within the country. I feel there is a great chance of seeing a devaluation."