The latest China forecast from Goldman Sachs:

Goldman Sachs now forecasts that the China economy will overtake the US as the world’s largest economy by 2027. Several emerging market countries are predicted by Goldman to overtake key developed market countries in the not too distant future.

They predict near term-growth for China at 8.3% in 2009 and 10.5% in 2010, compared to the world economy at -1.1% for 2009 and 3.3% for 2010.

Ranking countries by projected GDP for 2027, Goldman sees:

1. China
2. United States
3. EU-5
4. India
5. Japan
6. Germany
7. Russia
8. UK
9. Brazil
10. France

The numbers for 2009 and 2010 are not at all crazy or anything, but let’s get real here. These guys are peddling China deals and desperately looking at the China market as a global leader for growth.

To the extent that they can talk up the investment opportunities here, it’s good business. Investors will get excited and hop on board, which means good numbers for Goldman China and yummy bonus money for the Asia team.

Conflict of interest much? Not really a problem except for the fact that the financial services industry seems to rely way too heavily on these company-generated forecasts. I’m not a conspiracy theory kind of guy, and I understand that the same people at Goldman who are shopping deals around China are not the same analysts that put together these reports.

And yet . . .

By the way, having China catch up to the U.S. economy in 20 years? That seems quite optimistic. China will most likely have higher growth rates over that period of time, however, and I think that’s the big motivator behind these kinds of forecasts.

I mentioned all of this to my wife, who looked at me funny and said, essentially, “D’uh! Of course you can’t trust those reports.” This is the result of a lifetime of getting news from CCTV, Xinhua, and People’s Daily — a breathtakingly high level of cynicism that puts even my own warped world view to shame.