China's expansion, which has averaged more than 10 percent during the past decade, may slow to 9.5 percent this year, according to the median estimate of 11 economists surveyed by Bloomberg. The outlook compares with projected global growth of 4.3 percent, according to June forecasts from the Washington-based International Monetary Fund.

Nouriel Roubini, the co-founder of New York-based research firm Roubini Global Economics LLC, and who predicted the worldwide financial crisis, said in a June 11 interview that China's reliance on exports and investment may spur "massive" non-performing loans and cause the expansion to falter after 2013.

Credit Suisse Group AG cut its earnings forecasts for Shanghai index companies and advised reducing bank holdings in a June 20 research report. A surge in "off-balance-sheet" financing may force policy makers to clamp down on credit growth for longer than investors anticipate, according to Hong Kong-based analysts Vincent Chan and Peggy Chan. Chinese profits may increase 10 percent this year and next, weighed down by banks' non-performing loans, the analysts wrote.

Roubini Global still sees Chinese growth of 9.1 percent this year and 8.8 percent next year, according to the firm's web site. Credit Suisse predicts an expansion of 8.7 percent this year and 8.5 percent in 2012. The Zurich-based bank has a target of 3000 for the Shanghai index.

"There are some underlying problems for the long term but the situation isn't as bad as some investors' forecast," said Pan Jiang, a Shanghai-based money manager at Franklin Templeton Sealand Fund Management Co, which oversees the equivalent of more than $2.6 billion. "We shouldn't underestimate the government's insight into the situation and its power to control the risks."

Shanghai index profits will jump 32 percent in the next 12 months, topping the 19 percent growth rate for the MSCI emerging-market index, according to the average of more than 14,000 analyst estimates compiled by Bloomberg.

CITIC Securities recommended shares of property developers and cement companies because of the government's housing measures. China's biggest brokerage, which turned "positive" on the nation's stocks in a June 20 report after being "cautious" since April, has a six-month target of 3500 for the Shanghai index.

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