BEIJING (Reuters) - Softer domestic demand probably pulled down growth in China's imports, investment and retail sales to multi-month or multi-year lows in September, raising questions about whether policymakers should do more to fight the economic slowdown.
Fading momentum worldwide would add to bets that the world's second-largest economy likely slowed in the third quarter as its sagging housing market increasingly weighed on other sectors.
Retail sales likely grew at their slowest pace in about 3-1/2 years in September, rising 11.7 percent from a year ago, a Reuters poll of economists showed.
Fixed-asset investment, one of the two biggest drivers of the economy alongside domestic consumption, is also expected to show further signs of faltering, posting its worst performance in nearly 13 years.
Growth is seen at 16.2 percent between January and September compared with the year-ago period, a level not seen since December 2001.
Reflecting softer domestic demand, imports probably fell 2.7 percent in terms of value in September from a year earlier, the biggest drop in six months. The weak figure could put additional downward pressure on already sliding global commodity prices.
"The Chinese economy probably continued its downward trend in the third quarter," said Shen Minggao, an economist at Citi. "The property drag reshaped the investment landscape, and its downside has not been contained due to policy hesitation."
As a result of the broad slowdown, producer deflation was expected to have persisted for the 31st consecutive month as producer prices fell 1.5 percent.
Annual consumer inflation was also seen cooling to a two-year low of 1.7 percent in October.
The export sector is the only part of the economy expected to show any signs of buoyancy. Export growth was seen quickening to 11.8 percent in September from a year ago, up from 9.4 percent in August.
Growth in factory output was also predicted to have picked up to 7.5 percent on an annual basis, but only because it had touched a six-year low of 6.9 percent in August.
PROPERTY STILL WEAK
In a bid to stem the slide in the property market, China cut mortgage rates for second-home buyers last week by giving them a 30 percent discount on loans. Downpayment levels were also lowered to 30 percent from 60-70 percent.
The move, which some economists have described as China's most important policy change this year, was aimed at bolstering a housing market that accounts for about 15 percent of China's economy and affects 40 industries from steel to cement.
It was the first time China has cut mortgage rates since the 2008/09 global financial crisis.
Yet some analysts doubt the worst is over. A glut of unsold homes should weigh on future property investment, they argued.
"We expect property construction to slow further after the 'Golden Season'", said Tao Wang, an economist at UBS in Hong Kong, referring to the months of September and October, the usual peak season for home sales.
"This, in turn, should impose an increasingly negative drag on demand and production in other industries," she said.
Indeed, the impact from a flurry of stimulus measures unveiled earlier in the year already seems to be waning.
Whether China decides to further loosen policy would depend on whether its leaders are prepared to stomach slower economic growth - and likely higher unemployment - in exchange for a model of economic development that is less reliant on easy credit.
Despite public comments by senior Chinese leaders that China's monetary policy has not been loosened this year to stoke economic growth, data suggested otherwise.
The amount of new loans that were disbursed in the first eight months of this year was up 5 percent compared with the same period last year.
A central bank official was also quoted as saying in July that Chinese banks are likely to extend 9.5 trillion yuan of new loans this year in their strongest lending surge since the global financial crisis.
Economists predicted that liquidity conditions were little changed in September.
Growth in broad M2 money supply probably grew 12.9 percent, slightly under a 13 percent annual target, while banks disbursed 735 billion yuan (73.98 billion pound) of new loans, up from 702.5 billion yuan last month.
Foreign exchange reserves were seen at $4.07 trillion at the end of the third quarter, up from $3.99 trillion in the previous quarter.
(Reporting by Koh Gui Qing; Editing by Kim Coghill)