The two English teams face each other in a pre-season clash in China on Friday a little over two months after the Blues beat Manchester United to the top of the table on goal difference.
Arteta, 30, believes Arsenal can challenge for higher than third place this year but accepts that Roberto Mancini’s side will be top dogs.
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He told reporters: “I think Manchester City would be the favourite team in next EPL season. If we could beat them in Beijing, it would be a bright start for a new season.
“Anyway, Arsenal also has a big chance to fight for the title, if we could show our abilities totally, we could overcome any rivals.”
The former Everton player was a regular under Arsene Wenger in the 2011-12 season after signing for the Gunners on transfer-deadline day last summer.
Arteta said he hoped to impact more in attack this campaign, adding: “At least I should score more than 10 goals. I believe I could do that.”
So far this summer Wenger has lured Germany attacker Lukas Podolski and French striker Olivier Giroud to boost the Gunners attack.
Arteta praised the pair, saying: “Podolski could play in my positions in the pitch.
“Giroud played quite well in last season in Ligue 1. He was the top scorer. Both of them would strength the attacking.”
Arteta was brought to the Emirates Stadium a year ago to help fill the void left by Barcelona-bound Cesc Fabregas, and the Spanish playmaker admitted he believes the two are comparable.
“We are actually similar in some way,” he said. “But there are still something different.
“He would like to play behind our forwards, and my position is a little bit deeper, as a defensive midfield.”
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Spain’s 4-0 thrashing of Italy in the Euro 2012 final cemented the nation’s place as the top international side on the planet, and Arteta revealed he would love to be part of their 2014 World Cup squad.
“Spain have more talent players that we have never seen before,” the Arsenal player continued.
“There are battles for all 11 positions. I still work hard, I hope I could have a chance to play for my country in 2014 Brazilian World Cup.”
Arteta, who played for Barcelona during his youth, admitted the style of play at Arsenal is not to dissimilar to that of the Catalan club.
“We have the similar football philosophy - keep the ball, attack forever and [be] skilful," he said.
“As a player who started football career in Barcelona, I would always like to play football like this.”