China shoppers 'to boost growth'

Rapid urbanisation and rising incomes are fuelling consumer spending

The World Bank has raised its forecast for China's economic growth this year by almost 1%.

It predicted that the world's fastest growing economy would expand at a break-neck pace of 11.3%, compared with its initial projection of 10.4%.

Strong investments and exports have so far been the main drivers of China's booming economy.

But the World Bank is confident that a rise in consumer spending will lift China even if demand for exports slows.

Consumer on the rise?

The predictions come on the same day that government data showed retail sales growth expanding at its fastest rate in more than three years.

Retail sales grew 17.1% in the year to August, up from 16.4% in the year to July, fuelled by rising incomes, but also by the steady rise in inflation.

A sharp increase in meat prices, particularly pork, saw China's rate of consumer price inflation reach 6.5% in the year to August - a second 10-year high in two months.

But analysts were still encouraged that domestic consumption is starting to play a greater part in China's gross domestic product growth, offsetting its reliance on overseas demand for its products.

"Consumption growth has not reached its peak yet, and we are now expecting even higher growth rates in coming months," said Lin Songli, economist at Guosen Securities.