HONG KONG (MarketWatch) -- Goldman Sachs is forecasting an upbeat year ahead for China, where the world's fastest-growing major economy will be underpinned by the "tail winds" of aggressive monetary and fiscal policy stimulus and rebounding corporate earnings.

"We think the overall market shape will be upward sloped," said Goldman Sachs Chief China Strategist Thomas Deng, during a presentation Tuesday in Hong Kong.

Bank lending is expected to slow but not stall, with new loans in 2010 expected at 7 trillion yuan to 8 trillion yuan, Goldman estimates. That's down from an expected 10 trillion yuan in new lending this year.

Corporate earnings will rise 29% in 2010 when compared to 2009, according to Goldman estimates. Deng cited healthcare, automotives and companies geared to growth in China's central regions among favored investment themes.

Deng expects an upbeat first quarter, as economic data will contrast favorably against the weaker start seen in the first three months of 2009. As the year progresses, the year-on-year performance figures won't show have quite the shine, ushering in volatility that will persist through much of the middle of the year.

"When the government sees the strong growth momentum, measures could be introduced that will represent some pressure to the market," Deng said.

Other risk factors include a potential slowdown in the U.S. economy towards the second half of the year as U.S. economic stimulus efforts tail off.

Deng cited healthcare, automotive and companies geared to growth in China's central regions among favored investment themes.

Goldman forecast the Hang Seng China Enterprises Index, Hong Kong's benchmark for China shares, will end 2010 at around the 17,000-level, or about 30% higher than its current level.