Oct. 13 (Bloomberg) -- China's export growth probably cooled, increasing the likelihood the government will step up spending to stimulate economic growth after the global financial crisis prompted two interest-rate cuts in a month.

Exports rose 20 percent in September from a year earlier after gaining 21.1 percent in August, according to the median estimate of 13 economists surveyed by Bloomberg News.

China will boost domestic demand to sustain the nation's ``fast and stable'' economic growth, central bank Deputy Governor Yi Gang said in Washington this weekend. Economists say policy choices include spending on infrastructure, looser restrictions on lending, tax cuts, more reductions in borrowing costs and slower gains by the yuan against the dollar.

``We expect export growth to decelerate sharply in the coming quarters,'' said Wang Tao, an economist at UBS AG in Beijing. ``As the financial crisis develops, the most important concern for China is economic growth and the government will ease both fiscal and monetary policy to protect it.''

China cut interest rates last week as the Federal Reserve, European Central Bank and four other central banks lowered borrowing costs in a failed bid to thaw credit markets.

``Despite the negative shocks of the financial crisis, China will accelerate transformation of the growth model, promote domestic demand -- especially household consumption -- and maintain fast and stable growth,'' Yi said in a statement in Washington, where attended the annual meetings of the International Monetary Fund and the World Bank.

`Greatest Global Contribution'

``For a country with a population of 1.3 billion, its greatest global contribution is to sustain fast and stable economic development,'' Yi said.

Trade figures may be released as early as today. The surplus may fall to $24.5 billion from August's record $28.7 billion, the survey showed.

Export growth is down from 25.7 percent for all of 2007. A central bank index measuring orders for overseas shipments fell in the third quarter to the lowest level since July 2005, when China revalued its currency.

The International Monetary Fund said last week that China's economy can sustain growth of as much as 9.3 percent next year even as a global recession looms.

``In the past China has been successful in responding quite quickly to increase spending, particularly on infrastructure, to offset the decline in export growth,'' said Charles Collyns, deputy director of research at the IMF.

`The Boom Ends'

``The boom ends'' was the heading on a more pessimistic assessment from Royal Bank of Scotland Group Plc last week that cut a growth estimate for next year to 8 percent on slower exports and, mainly, weaker domestic demand. The 64 percent decline this year in the CSI 300 Index of stocks and slumping property prices in some cities are among drags on growth.

China's trade surplus will shrink by 4.3 percent this year to $251 billion on weaker demand, a stronger currency and increases in import prices, the Chinese Academy of Social Sciences estimated in a report last week. That will knock 0.3 percentage point off this year's economic growth, compared with a 2.6 percentage point contribution in 2007, it said.

Imports climbed 22.9 percent in September after rising 23.1 percent in August, the survey of economists showed. Falling prices for commodities such as copper and oil have trimmed the value of inward shipments.

More Rate Cuts

The People's Bank of China may cut rates three or four more times through 2009 and further ease a quota that limits how much banks can lend by year's end, according to Morgan Stanley. The nation's key one-year lending rate is 6.93 percent.

Reserve requirements for lenders are likely to keep falling and the government may cut taxes and increase spending, Merrill Lynch said last week.

The yuan gained 0.5 percent last quarter against the dollar, down from 2.3 percent in the previous three months, helping to shield exporters of toys, shoes and clothes by preventing their prices from rising more quickly overseas. UBS's Wang said she saw little room for more appreciation.

China's economic expansion slowed for a fourth straight quarter to 10.1 percent in the three months ended June 30. Third- quarter growth is due to be announced on Oct. 21.

UBS last week cut its forecast for this year's expansion to 9.6 percent from 10 percent.

To contact the reporter on this story: Nipa Piboontanasawat in Hong Kong at npiboontanas@bloomberg.net

Last Updated: October 12, 2008 12:01 EDT