By staff reporter Sun Huixia

(Caijing.com.cn) The World Bank raised its forecast for China's 2009 economic growth to 7.2 percent in its China Quarterly Update published on June 18, up from a 6.5 percent forecast in March.

The Washington-based international financial institution based its revision on China's record amount of loans and surging investment, which resulted from the massive 4 trillion yuan stimulus package announced last November.

China, the world's fastest expanding economy and its third largest, has witnessed strong retail sales and a recovery in real estate and imports in the past quarter.

"Growth in China should remain respectable this year and next, although it is too early to say a robust sustained recovery is on the way," said Ardo Hansson, Lead Economist for China.

"Government influenced investment will strongly support growth in 2009. However, there are limits to how much and how long China's growth can diverge from global growth based on government influenced spending, " said Hansson.
 

The World Bank report found that China's growth is unlikely to rebound to very high single digit rates before the world economy recovers convincingly.

The State Council, China's cabinet, resolved on June 17 to carry on with an active fiscal policy and a moderately loose monetary policy.

The cabinet said China is at a critical point in its recovery, yet challenges – including plummeting exports and excess production capacity – remain.

Exports for the first five months totaled US$ 426 billion, down 21.8 percent year-on-year, according to the General Administration of Customs.

The cabinet also said the central government will further adjust China's economic structure to expand the role of domestic consumption.