The World Bank has raised its forecast for growth in China this year from 6.5% to 7.2% amid signs that the economy is doing better than expected.
Bank analysts say the government's four trillion yuan ($585bn, £358bn) stimulus package has helped the economy.
But it says the country's exports are still down, as the rest of the world struggles with the global recession.
The World Bank believes the global economy, excluding China, will shrink by about 3% this year.
"Developments in the real economy [in China] have been somewhat better than expected three months ago," says a report published by the bank.
'No meaningful increase'
It predicted in March that the Chinese economy would grow by 6.5% in 2009, several percentage points down on last year's growth.
But the government stimulus package, and increased bank lending, has protected the economy from the worst effects of the global recession, leading the bank to raise its growth forecast.
"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, the bank's leading economist in China.
But it is not all good news. China's export sector has been one of the hardest hit parts of the economy and has still not recovered.
This has led to millions of migrant workers - farmers who leave their villages to find work in China's factories - losing their jobs.
"We have not had a meaningful increase in exports since last year's plunge," said World Bank economist Louis Kuijis, speaking at a press briefing to launch the bank's latest China predictions.
Some migrant workers who lost their jobs late last year told the BBC they had still not been able to find new jobs.
