Economists recommended China use more selective policies in the face of possible opportunities and risks from a third round of quantitative easing announced by the US Federal Reserve.

Opportunities include restoring confidence in export demand and an inflow of investment, but risks include exchange rate fluctuation and higher inflation, they said.

On Thursday, the Federal Reserve said it would buy $40 billion of mortgage debt per month and continue to purchase assets until a marked turn is seen in the US employment outlook.

Although the effect of quantitative easing is decreasing, it is "still better than nothing", said Qu Hongbin, chief economist on China with HSBC Holdings. He expected the easing would help US families and boost consumption, which would be good news for Chinese exporters.

Meanwhile, he said, low interest rates in the US will squeeze investors out of dollar assets and into emerging markets, and China should see a slower outflow of foreign capital.

"Policymakers around the world are trying to boost economic growth. China should also take the opportunity to achieve maximum results," he said.

As for China, Qu suggested that greater fiscal support should be introduced to help boost domestic demand and create jobs. Some corresponding easing in monetary policies would help drive China's GDP growth to 8 percent year-on-year in the fourth quarter.

China's economic growth fell to a three-year low of 7.6 percent year-on-year in the second quarter.

Xiang Songzuo, chief economist with the Agricultural Bank of China, said enlarged liquidity in Western financial institutions may increase foreign investment in China.

Prospects for a further slowdown in China led foreign direct investment to drop 3.6 percent year-on-year in the first seven months of the year.

However, Xiang warned that the quantitative easing may cause fluctuations in the exchange rate and push up the renminbi, resulting in a price disadvantage for China's exports.

China's export growth climbed only 2.7 percent year-on-year in August, with imports down 2.6 percent.

The yuan has been depreciating since May, and the US dollar strengthened against the backdrop of the euro-debt crisis.

Li Daokui, professor of economics with Tsinghua University and a former adviser to the central bank, said the easing would channel more speculative capital into China over expectations for a stronger yuan and relatively lower inflation than in the US.

After the world financial crisis in 2008, the US Federal Reserve completed two rounds of quantitative easing, injecting more than $2 trillion in US Treasury securities and mortgage-backed securities.

Zhu Min, deputy managing director of the International Monetary Fund, said the quantitative easing is likely to play a useful role in stabilizing the world economy but would also cause prices to go up.

But right now, he said, the danger for a lingering slowdown looks larger than that of higher inflation.

China's consumer price index rose 2 percent year-on-year in August after registering a 30-month low of 1.8 percent in July.

Wei Liang, an analyst with the China Institutes of Contemporary Studies, said the effect of the quantitative easing accumulates month by month, and China will have to wait to see its full impact.

However, he warned, China's foreign exchange reserve administrators should start bracing themselves against risks to China's massive assets in the US dollar, and pay attention to possible increases in speculative money.

"It is unlikely that China will allow the dollar to weaken against the yuan. The effect on China will be very small," said Derek Scissors, senior research fellow at Washington-based Heritage Foundation.

If the US measures succeed in boosting the economy, it will be positive for the eurozone, said Duncan Freeman, research fellow of Brussels Institute of Contemporary China Studies.

Freeman said that one likely impact of the US easing measures will be to weaken the US dollar, and since the yuan tends to move in line with the US currency, the effect may also be to weaken the yuan against the euro.

In Hong Kong, officials said on Friday they were concerned about the local housing market overheating following the US easing.

Because the Hong Kong dollar is pegged to the greenback, officials cannot raise local interest rates to cool the property market. For the last few years, Hong Kong's housing prices have surged because of low interest rates and an influx of money from the mainland.

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