Unleashing consumption potential will help sustain economic growth in China, according to a World Bank report published in Beijing on Friday.

Policy support has helped boost China's consumption and spurred a rise in home sales in major cities, with the economy maintaining growth momentum in early 2025, the report said.

ALSO READ: China approves export licenses for rare earth materials

"Household consumption will be key to sustaining growth amid external and domestic economic challenges," said Mara Warwick, World Bank division director for China, Mongolia and Korea.

READ MORE: Beijing to open world's first ‘4S store’ for embodied AI robots

She said stronger social safety nets, especially for migrant and temporary workers, would encourage more spending by improving financial security and reducing the need for precautionary saving.

By expanding public investment and providing targeted support to households, China's proactive fiscal policy is expected to support China's economic growth, the report stated.

China's infrastructure and manufacturing investment has responded strongly with faster increases to policy support, such as accelerated issuance and disbursement of government bonds, policy incentives for firms to upgrade equipment, and targeted support for priority sectors, it noted.

READ MORE: Chinese ministry backs carmakers' payment commitment to suppliers

China's gross domestic product grew by 5.4 percent year-on-year in the first quarter of 2025, while retail sales of consumer goods, a major indicator of the country's consumption strength, rose 4.7 percent year-on-year in the first four months of 2025, official data showed.