IMF upgrades its forecast for China's economy, but says reforms are needed to support growth

The International Monetary Fund has upgraded its forecast for China’s economy, while warning that consumer-friendly reforms are needed to sustain strong, high-quality growth.

The IMF's report, issued late Tuesday, said the world's second-largest economy will likely expand at a 5% annual rate this year, based on its growth in the first quarter and recent moves to support the property sector.

But it warned that attaining sustained growth requires building stronger social safety nets and increasing workers' incomes to enable Chinese consumers to spend more.

The IMF also said Beijing should scale back subsidies and other “distortive” policies that support manufacturing at the expense of other industries such as services.