China will ease monetary policy through the end of next year to support growth in the face of a global slowdown, lowering interest rates and slowing the pace of yuan appreciation, a Reuters poll showed.

The forecasts support the view that Chinese authorities have shifted their priority from fighting inflation to supporting growth, as global headwinds threaten to sap demand for Chinese exports and bring annual economic expansion down into single digits for the first time since 2002.

The poll of 18 analysts based in China, Hong Kong and the region was conducted over the past week, just as the yuan finished up one of its slowest quarterly rises against the dollar since it was revalued in July 2005.

It ended September at 6.85 per dollar, up just 0.1 percent during the third quarter, compared with a 6.6 percent rise in the first six months of the year.

The median forecast of the poll was for the yuan to hit 6.75 per dollar by the end of this year. It is expected to reach 6.56 per dollar 12 months from now, for an appreciation of 4.4 percent from now to the end of September 2009, compared with a 9.6 percent rise over the last 12 months.

"Given the slowdown in growth, especially from the external sector, there's no justification for further strengthening," said Jun Ma, chief economist for Greater China with Deutsche Bank in Hong Kong.

China has relied heavily on yuan appreciation to fight inflation, which has been skirting near 12-year highs since late last year, but price pressures show signs of ebbing and the economy, buffetted by the global credit crisis, has weakened.

The median forecast of the poll is for the yuan to end 2009 at 6.5 per dollar.

If growth in the United States and Europe were to slow more significantly, there could be even less room for the yuan to rise, Ma said.

A separate Reuters poll showed that economists expect China's growth to slow to 9.9 percent this year from 11.9 percent last year and stand at 9.0 percent in 2009.

Officials have said a moderate slowdown in growth would be welcome as it would allow China to focus more on the quality of growth and take some of the heat off prices, but they are also under pressure to keep the economy expanding quickly enough to create new jobs.

To that end, the analysts polled expect the People's Bank of China to continue a rate-cutting campaign that it started last month, after raising them six times in 2007. - Reuters