By MARTIN CRUTSINGER

WASHINGTON, Nov 20, (AP) -- The U.S. trade deficit widened to $11.3 billion in September, the second-worst showing on record, as oil imports surged and heavy demand for toys and Christmas decorations kept America's deficit with China at an all-time high.

The deficit in goods and services was up 10.1 percent from a revised August imbalance of $10.3 billion.

For the second straight month and third time this year, America's deficit with China exceeded the imbalance with Japan. The September deficit with China was a record $4.7 billion, up 0.4 percent from August.

Commerce Secretary Mickey Kantor said the imbalance underscored the need for China to do more to lower trade barriers that are keeping out U.S. exports.

``We have made some progress in opening markets in China, but we have a long way to go,'' he told reporters. ``We want a level playing field. As they have access to our market, we want access to theirs.''

President Clinton was scheduled to have private talks Sunday with Chinese President Jiang Ziamen in Manila, the Philippines, where both leaders will be attending a Pacific Rim summit conference. Trade is a top item on their agenda.

So far this year, the U.S. trade deficit is running at an annual rate of $114 billion, even worse than last year's imbalance of $105.1 billion.

Some private economists said current trends seem to be working against the United States and predicted the deficit will grow still higher in 1997.

``We have a serious trade problem,'' said Lawrence Chimerine, chief economist at the Economic Strategy Institute, a Washington think tank. ``All the numbers are getting worse.''

Other private economists said the unexpected widening of the deficit in September will contribute to a downward revision for overall economic growth, as measured by the gross domestic product.

The GDP for the July-September quarter was originally put at 2.2 percent, but Bruce Steinberg, an economist at Merrill Lynch, predicted that would be revised to an even more sluggish 1.5 percent.

Jerry Jasinowski, president of the National Association of Manufacturers, said American business executives are worried about the rise of the dollar acting as a further drag on exports at a time when the domestic economy is already slowing.

``If the current expansion is to continue, everything possible must be done to increase exports,'' he said.

Financial markets were not perturbed by the wider trade deficit. The Dow Jones industrial average was up 44 points in late afternoon trading. Some analysts said the prospect of a weaker GDP figure made an increase in interest rates by the Federal Reserve even less likely.

For September, the rise in the deficit with China reflected a second straight month of heavy demand for Chinese toys and Christmas decorations as U.S. retailers stocked up for the holiday season.

America's deficit with Japan actually edged down slightly in September, dipping 0.3 percent to $3.8 billion, reflecting in part an increase in U.S. exports of autos and auto parts to Japan.

The United States is hoping that last year's landmark auto agreement with Japan will trim the trade imbalance between the two nations. In one of the few bright spots in the report, U.S. auto exports worldwide hit a record $5.9 billion in September.

The deficit with Canada, America's biggest trading partner, totaled $2 billion in September, down 15 percent from August, but the deficit with Mexico, the other country in the North American Free Trade Agreement, was up 8.9 percent to $1.7 billion.

U.S. imports of petroleum products were up 12.5 percent in September to $6.28 billion. The increase reflected a rise in the volume of imports and an even bigger increase in price, with the average cost of a barrel of crude hitting $20.02, the highest level since January 1991 during the Persian Gulf War.

Total imports of goods and services were up 0.1 percent to $80.1 billion while the imports of goods alone climbed to $67.5 billion, an all-time high.

U.S. exports dropped 1.4 percent in September to $68.8 billion, led by a big decline in exports of commercial aircraft.

The deficit in goods of $17.68 billion in September was an all-time high. The surplus in services, such things as airline fares and consulting fees, totaled $6.34 billion in September.

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