China’s retail sales will continue to grow by about 10 per cent this year thanks to the stabilising economy and better policy support, an official report has forecast.

Growth will be led by online retail sales, expected to increase in value by about 25 per cent, according to a retail sector report released yesterday by the Ministry of Commerce.

Clear improvement in the country’s economic performance was one of the major reasons behind the positive forecasts, says the report.

China’s economy grew 6.9 per cent year on year in the first quarter, the fastest pace in six quarters.

Retail sales of consumer goods in the first five months rose 10.3 per cent, slightly down from last year’s 10.4 per cent, according to the National Bureau of Statistics.

With online sales booming, traditional retail segments are facing a better policy environment with the government rolling out favorable guidelines in November.

Online retail sales surged 26.2 per cent last year, compared with 7.7 per cent growth in convenience stores and 7.4 per cent in shopping malls.

“With rising rents and dropping profits, it has become an unstoppable trend for brick-and-mortar stores to become smaller and smaller,” says the report.

The ministry’s data shows the number of retail companies rose 28 per cent year-on-year to 2.45 million at the end last year.