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China’s exports and money supply grew more than estimated in September, signaling that the world’s second-biggest economy may be stabilizing after a slowdown that began in the first quarter of 2011.

Overseas shipments increased 9.9 percent from a year earlier, the customs administration said Oct. 13 in Beijing. That was more than the 5.5 percent median estimate in a Bloomberg News survey of economists. M2 money supply gained 14.8 percent, the fastest pace since June 2011, a central bank report showed the same day.

Inflation numbers due today and an Oct. 18 report on the third-quarter economy will complete the picture as officials assess whether more measures are needed to sustain growth as the Communist Party prepares for a once-a-decade leadership handover starting next month. At an International Monetary Fund meeting in Tokyo yesterday, central bank official Yi Gang said that bubble risks remain in housing markets in major cities and stimulus will be restricted to an “appropriate” level.

“Better-than-expected export growth is likely to help support employment and reduce pressure for more policy easing ahead of the leadership transition,” said Chang Jian, a Hong Kong-based economist at Barclays Plc. “Monetary easing has been constrained by concerns about a rebound in property prices and medium-term inflation risks.”

The lack of a “big” fiscal stimulus also points to concerns about rising government debt, banks’ non-performing loans, and inefficient investment, she said.

Inflation Forecast

Inflation was 1.9 percent last month, close to a two-year low, according to the median forecast in a Bloomberg News survey. China’s gross domestic product expanded 7.4 percent in the third quarter from a year earlier, according to the median in a separate survey, the seventh quarterly deceleration.

Yi, a deputy governor at the central bank, said yesterday that while this year’s inflation rate is “fine” and may be 2.7 percent for the full year, longer-term threats are from agricultural costs and prices for imported raw materials, commodities and energy, which can be driven up by global monetary easing.

The IMF last week reduced its estimate for China’s growth this year to 7.8 percent, which would be the weakest pace since 1999, as Europe’s debt crisis crimps exports. Alcoa Inc., the largest U.S. aluminum producer, cut its forecast for global consumption of the metal on slowing Chinese demand.

Limiting Stimulus

China has refrained from implementing stimulus on the scale of the 4 trillion yuan ($586 billion at the time) package it unleashed at the end of 2008 during the global financial crisis. The response to the latest slowdown has included two cuts in interest rates, three reductions in bank reserve requirements, lower taxes, higher spending on social welfare and accelerated investment approvals.

The expansion in M2 was driven by the central bank pumping record amounts of cash into the money markets through reverse repurchase agreements, said Hu Yifan, Hong Kong-based chief economist at Haitong International Securities Group. New lending was below economists’ estimates, data showed last week. Analysts' median forecast had been for a 13.7 percent gain in M2.

The central bank’s Oct. 13 report also showed the nation’s foreign-exchange reserves, the world’s largest, rose to $3.29 trillion in September from $3.24 trillion in June.

Economic Momentum

The trade and money supply data “suggest economic momentum in China may be picking up,” said Zhang Zhiwei, chief China economist with Nomura Holdings Inc. in Hong Kong. “These upside surprises are consistent with other positive signals in recent weeks” indicating growth may rebound this quarter, he said.

Shipments to the European Union fell 10.7 percent last month from a year earlier. At the same time, those to Southeast Asian nations jumped 25.5 percent and sales to the U.S. increased at the fastest pace in three months.

Imports rose 2.4 percent, in line with the median economist estimate, leaving a trade surplus of $27.7 billion, the biggest since June.

In the first nine months, the surplus widened about 38 percent from a year earlier to $148.3 billion, customs data show. That may provide ammunition to Republican presidential candidate Mitt Romney, who pledges to designate the nation a currency manipulator if elected, a step the U.S. government hasn’t taken since 1994.

Geithner’s Take

The trade data indicated that the value of China’s exports to the U.S. exceeded its imports from the nation by about $21 billion in September. U.S. Treasury Secretary Timothy F. Geithner said in Tokyo on Oct. 13 that while “some progress” has been made toward a more balanced economic relationship with China, more is needed.

Anti-China rhetoric may feature in the lead-up to the presidential election on Nov. 6, said Liu Li-Gang, a Hong Kong-based economist with Australia & New Zealand Banking Group Ltd. The yuan, which touched a 19-year high against the dollar last week, may appreciate until then in response to the pressure, Liu said. The currency has gained about 2 percent since July 25. It closed last week at 6.2672 per dollar.