UBS raises growth forecast to 7.6 percent

UBS AG raised its China's GDP growth prediction for 2013 to 7.6 percent on Tuesday from 7.5 percent, based on August's positive signals.

Growth is likely to accelerate to 7.7 percent in the third quarter and slow slightly to 7.5 percent in the fourth as a slower increase in new loans since May will add pressure on investment in infrastructure construction, said Wang Tao, chief Chinese economist at the UBS AG.

Real estate is expected to remain stable in the near future, she said.

Wang predicted that the yuan's value against the US dollar may not appreciate in the next 12 months, due to the faster than expected economic recovery in the United States.

It is unlikely that Chinese banks will face systematic risks or a debt crisis in the short term, as deposits are at a high level, according to Wang.

In the long run, the economy will face pressure from production overcapacity and an increase in non-performing loans, which require policy makers to undertake major structural reform.

"More growth potential will be released through urbanization and industrialization. And we look forward to see more reform measures released in November."