Goldman Sachs expects the Chinese economy to grow faster than it had initially predicted, betting that the Government will be cautious in taking away the stimulus injected so far this year.
China, the fastest-growing of all the major economies, will expand 9.4pc this year, Goldman said in a report, up from an earlier estimate of 8.3pc.
“China is closer to a point at which it should be equally worried about tightening too late as it is about tightening too early,” Michael Buchanan, an economist at Goldman Sachs in Hong Kong, wrote in a report, according to Bloomberg. Chinese officials will be reluctant to remove the stimulus given the general weakness in the global economy, he said.
The Chinese economy grew 7.9pc in the three months to the end of June compared with the same period a year earlier, as the Government's 4 trillion yuan (£352bn) gained traction. Goldman's forecast comes after Wen Jiabao, the Chinese Premier, said that the stimulus package will stay in place because China faces a slide in demand for its exports.
However, the Chinese government is having to ensure the stimulus does not feed into new stock market and property bubbles. Fresh figures published on Monday showed that property sales soared 60pc by value in the first seven months of this year and the Shanghai Composite Index has already jumped 78pc this year.
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