PREVIEW-China August data to show economy finding its feet
* Industrial output seen up 9.9 pct in Aug vs July's 9.7 pct
* Jan-Aug investment seen up 20.2 pct vs 20.1 pct in Jan-Jul
* Exports seen up 6 pct, imports up 11.3 pct in August
* August retail sales seen at 13.2 pct, same as July
* Trade data due Sep 8, CPI on Sep 9, and activity data on Sep 10
BEIJING, Sept 4 (Reuters) - China looks to have prevented a sharp slowdown in its economy, data for August due next week should confirm, after the government stepped in with policies to encourage investment and strengthen its hand to push through reform plans.
After slowing in nine of the past 10 quarters, there have been signs of stabilisation in the world's second-largest economy, including surveys this week showing manufacturing regaining momentum and growth in the services sector at a five-month high.
A Reuters poll of 26 economists shows factory output is expected to have grown an annual 9.9 percent in August, matching the January/February figure as biggest increase this year, while exports and investment tick up and inflation remains muted.
"The combination of steady growth and muted inflation provide a good environment for the authorities to push forward long-term structural reforms," Wang Tao, China economist at UBS in Hong Kong, said in a research note.
Wang expects a comprehensive reform package to be announced at meeting of the Communist Party's congress in November.
But a sustained recovery is not certain. Even though China appears better positioned than other emerging economies to handle a tapering of U.S. monetary stimulus, a severe credit crunch in June was a reminder of pressures in the economy.
The export picture remains subdued despite recent improvements, with a strong yuan affecting exporters, while new financing for companies remains tight and slower overall growth increases risks from large piles of local government debt.
The government has forecast growth of 7.5 percent this year, which would be the lowest in more than 20 years.
While Beijing had signalled a willingness to tolerate slower growth as it tried to wean the economy off an over-reliance on debt-financed construction and exports, that push seemed in question as recently as a month ago as investors worried about a deeper-than-expected downturn.
But then the government stepped up efforts to boost investment in railway projects and public housing, and launched a series of measures to help smaller companies, which were taken as signals that it would not let growth slide too far.
"We expect economic indicators to confirm growth has stabilised at the current level, helped by recent sector-specific policy measures in August," Helen Qiao, China economist at Morgan Stanley in Hong Kong, said in a note to clients.
INVESTMENT UP, TRADE BETTER
Fixed-asset investment, a key driver of the economy, is forecast to have grown 20.2 percent in the first eight months of 2013 from a year earlier, after a 20.1 percent rise in the first seven months.
Beijing's explicit endorsement of infrastructure construction, especially railway and environmental projects, is likely to drive a further expansion in fixed-asset investment in the coming months, economists said.
On the trade front, the median forecast was for exports in August to have grown 6 percent from a year ago, compared with an increase of 5.1 percent in July, while import growth was seen quickening to 11.3 percent from 10.9 percent in July.
That would produce a monthly trade surplus of $20 billion.
Economists warned of limited scope for improvement in external demand given the uncertain outlook for developed economies and capital outflows from emerging markets.
Should the economy need more support, low inflation offers officials some room to manoeuvre. The annual change in the consumer price index is seen slowing to 2.6 percent in August from 2.7 percent in July.
Consumer inflation has held between 2.0 percent and 3.2 percent in annual terms so far this year, well below the government target of 3.5 percent.
Factory-gate prices have been falling for more than a year, though the pace of decline is forecast to ease to 1.8 percent in August from July's 2.3 percent.
Retail sales are likely to have grown at the same rate as the previous month. A Reuters review of first-half earnings at more than 20 Chinese retailers found they were not convinced the economic slowdown had bottomed out.
The poll also showed new bank loans may have reached 700 billion yuan in August, nearly unchanged from July's level, while growth of M2 money supply is likely to have edged down to 14.4 percent from July's 14.5 percent.
Economists said that reflected the central bank's shift from a loose towards a neutral policy stance, though it has pledged to fine-tune monetary policy if needed.
(Editing by John Mair)