Concerns that contagion from Greece may spread to the much larger Italian economy are real and merit attention, but investors should look at China for longtime guidance, says Jim O'Neill, Chairman of Goldman Sachs Asset Management.

Inflation rates in China are on the rise, but may have peaked, which could spark a global stock-market bull run and outshine damage done by fears brewing in Italy and elsewhere in the Mediterranean.
"Italy is a big economy, and it's debt it large," O'Neill tells CNBC.

"This Italian situation is now being embroiled in the European mess, you're dealing with a potential debt problem of very large consequences, so the European policy makers need to do something about this pretty quickly."

China, however, may serve as a true weather vane for stock-market players.

Inflation rates in China rose to a three-year high in June to 6.4 percent, although sentiment is growing that consumer prices are peaking, which means the Asian giant will avoid a crash landing.

High unemployment rates in the United States, meanwhile, will likely mean that loose monetary policy will stay in place, which is also good for stocks.

"I am certainly in the optimistic camp because of the combination of the BRIC consumer and a very accommodative monetary policy in my opinion is a really powerful recipe for a bull market in equities," says O'Neill, who coined the term BRIC, which stands for Brazil, Russia, India and China.

Others agree with O'Neill that the inflation figures, while high, are no big deal.

"The June inflation number had already been widely expected by the market and its impact will be minor," says Ling Peng, chief strategist at Shenyin & Wanguo Securities Co. in Shanghai, according to Bloomberg.

"Inflation may have already peaked."

China will still likely raise interest rates to make sure the economy doesn't overheat, other analysts say.

"We expect the central bank to raise interest rates once more in the fourth quarter, as it did last year, to help prevent inflationary pressures from spilling over into next year," says Qiao Yongyuan, an analyst at CEBM in Shanghai, Reuters reports.

Even if rates do rise, the pace of tightening could slow.

"Policy tightening may ease with inflation peaking soon, and economic growth may pick up again," says Shen Yang, a Shanghai-based fund manager at Lombarda China Fund Management Co., a venture with Italy’s fourth-biggest bank, Bloomberg also reports.

"That’s positive for the stock market."