Japanese policymakers must be mindful of the potential negative impact that China's economic slowdown could have on Japanese exports, central bank Deputy Governor Hiroshi Nakaso said. He also warned of the risk that an expected interest rate hike by the U.S. Federal Reserve could heighten global market volatility and hurt emerging markets vulnerable to capital outflows. While China's economy is expected to stabilize on stimulus measures taken so far, its slowdown may be prolonged by the huge slack in output and the property market, he said. "Even if China's economy maintained its growth rate, the main contribution would be from public investment, so the effect on Asian economies and Japan's exports warrants due attention," Nakaso told business leaders in Kumamoto, southern Japan. Still, Nakaso voiced confidence Japan's economy can weather such global risks, and stressed that exports will emerge from the doldrums as global growth picks up. "The slowdown in exports and output are likely temporary," he later told a news conference. Japan's exports rose at the fastest pace in five months in June due to a pick-up in sales of cars and electronics. Though shipments to China picked up, a private factory survey showed new domestic and export orders fell in July. Japan Benefits from Weak Oil The BOJ trimmed its growth forecast this month as soft exports and output heightened the possibility of an economic contraction in the second quarter. It maintained its projection that inflation will hit its ambitious 2 percent target around the April-September first half of next fiscal year, signaling that it saw no need to expand monetary stimulus any time soon. Nakaso stuck to the BOJ's upbeat view on prices, saying that while inflation will hover around zero this summer, it will accelerate at a "fairly quick pace" after that. Consumer inflation would have been 1 percentage point higher were it not for last year's sharp oil price falls, he said, adding that the pressure from the oil rout will be the biggest this summer but dissipate thereafter. Nakaso dismissed the view recent renewed declines in oil prices could push inflation further away from the BOJ's target. While oil price falls may hurt inflation in the short-term, they will help accelerate price growth in the long run by stimulating the economy, he said. "Oil price falls are positive for an oil-importing country like Japan" by boosting corporate revenues and households' purchasing power, he added.