Once again, private-sector analysts are scrambling to raise their forecasts for China's economic growth this year. The latest revisions came after yesterday's announcement that the mainland's second-quarter economic output rose by a thumping 7.9 per cent over the year before. Impressed by the magnitude of the rebound from the first quarter's 6.1 per cent growth rate - the weakest since the mainland began releasing quarterly data in the early 1990s - a clutch of banks, including HSBC, JP Morgan, Morgan Stanley, UBS and Royal Bank of Scotland Group, promptly upgraded their forecasts. Convinced that a V-shaped recovery is now under way, most investment bank economists are now predicting gross domestic product growth of between 8 and 9 per cent for 2009 as a whole. The 'V' appears even more dramatic, if you compare output to the previous quarter rather than the same quarter of the year before (in economists' jargon, that's called on a quarter-on-quarter basis, rather than year-on-year). Seen this way, many analysts believe the Chinese economy ground to almost a complete halt in the last quarter of last year as export industries collapsed. Spooked by the slowdown, the government ramped up its own spending and ordered the country's banks to go out and lend in order to support activity and employment. In response, quarter-on-quarter growth snapped back, hitting an annualised 6.2 per cent rate in the first quarter of this year and a remarkable 15 per cent for the April-June period, according to estimates from HSBC (see the first chart below). Other banks believe the rebound was even more vigorous. According to Morgan Stanley, growth hit a startling 19 per cent rate in the second quarter. What's more, most of the investment bank analysts believe this recovery is sustainable. Qu Hongbin at HSBC describes a scenario in which government-led infrastructure spending generates massive demand for steel, cement, machinery and vehicles. That demand translates into new orders, raising industrial production and lifting corporate earnings. Restored to profit, companies will step up their own investment, creating new jobs and boosting incomes, which in turn will boost consumer demand. Not everyone is quite so sure, however. It is notable that although analysts at investment banks - which make their living selling securities and so have a vested interest in being bullish - are generally optimistic, economists at independent research houses tend to take a rather more sceptical view both of the figures announced yesterday and of China's short- to medium-term growth prospects. Mark Williams at Capital Economics believes that state bodies are exaggerating the pace of activity by reporting the full value of their planned investments rather than their current spending. Examining more reliable indicators like electricity consumption and internal freight volumes, he believes actual growth in the second quarter was more like 6 per cent, rather than the 7.9 per cent official rate. Charles Dumas at Lombard Street Research goes even further. Working from nominal data - that is actual economic output in terms of yuan, rather than the officially announced percentage changes - he concluded that first-quarter growth was close to zero. Mr Dumas accepts that there was a rebound in the second quarter, thanks to the government's stimulus spending, but believes that it was much less spectacular than the official figures make out. He calculates that China's true growth figure for the second quarter was between 3.5 and 4 per cent, or just half the rate claimed by Beijing.