BEIJING (Reuters) - China's annual economic growth is forecast to have quickened in the September quarter after slowing through the first half of the year, but the pick-up is expected to be shortlived as the government pushes on with its reform agenda.
Beijing has a growth target of 7.5 percent for 2013, which would be the weakest rate in more than 20 years, and has repeatedly said it would accept slower growth as it tries to restructure the economy to be driven by consumer demand, rather than investment, credit and exports.
The median forecast of 21 economists in a Reuters poll put gross domestic product growth at 7.8 percent in the third quarter from a year earlier, quickening from 7.5 percent in the second quarter and 7.7 percent in the first quarter.
"Economic data released since the beginning of July have been generally positive, benefiting from improving external demand and government efforts to manage growth expectations," Shuang Ding, an economist at Citi in Hong Kong, said in a research note.
"However, incoming data in September suggest that month-on-month growth appears to be flattening and will likely soften under a tighter credit environment and local fiscal constraints," he said, adding this could translate to slower growth in Q4.
After slowing in nine of the past 10 quarters, the economy looks to have stabilised since mid-year after Beijing acted to head off a sharper downturn that could have set back its reform efforts.
President Xi Jinping said on Monday a "7 percent annual growth rate will suffice" to meet a medium-term goal of doubling per capita income by 2020, adding "the slowdown of the Chinese economy is an intended result of our own regulatory initiatives."
The government has loosened policy at the margins by accelerating infrastructure investment, sustaining spending in public housing, and cutting taxes for small firms.
Recent data has shown some impact, with factory output growth hitting a 17-month high of 10.4 percent in August and retail sales growing at 13.4 percent, their fastest pace this year.
Growth in retail sales is likely to edge up to 13.5 percent in September, pointing to steady demand. And fixed-asset investment, a key driver of the economy, is forecast to have grown 20.3 percent in the first nine months of 2013 from a year earlier, unchanged from gains in the first eight months.
However, annual growth in factory output growth is expected to moderate to 10.1 percent. PMI surveys for September showed slower-than-expected growth in the factory sector, and slipping business confidence in the services industry.
Analysts expect credit conditions to tighten again later this year, further putting a brake on growth.
"Looking forward, we expect Q4 growth momentum to be somewhat weaker than in Q3 due to tapering restocking demand and weaker credit growth," Tao Wang, an economist at UBS in Hong Kong, said in research note.
Monetary data is likely to give some clue. New bank loans are likely to slip to 650 billion yuan ($106 billion) in September from 711.3 billion yuan in August, the poll showed, while annual growth of M2 money supply is likely to edge down to 14.2 percent from August's 14.7 percent.
On the trade front, the median forecast was for exports to rise 6 percent from a year ago, slower than growth of 7.2 percent in August, while import growth was seen at 7.0 percent, steady with the previous month's rate.
Consumer inflation is expected to rise 2.9 percent in September, quickening from 2.6 percent in August but still well below the central bank's 3.5 percent target for 2013.
A seasonal rise in food prices is considered the main factor pushing up headline consumer prices, analysts said.
In a further sign of a stabilising economy, producer prices are forecast to fall 1.4 percent in September from a year earlier, easing from a fall of 1.6 percent in August. However they will still have fallen for a 19th consecutive month.
China's foreign exchange reserves, the world's largest, are expected to have risen to $3.568 trillion (2.22 trillion pounds) at the end of September from $3.500 trillion at the end of June.
Reporting By Xiaoyi Shao and Natalie Thomas; Editing by Jonathan Standing and John Mair