The International Monetary Fund (IMF) said that the Chinese financial system is expected to develop by 10% this year on the back of strong domestic demand.

In its latest World Economic Outlook report, the IMF said, "In China, GDP growth exceeded the government's eight percent target in 2009 and is expected to be close to 10 percent in both 2010 and 2011. What has been so far mainly a publicly driven growth path, built on infrastructure investment, is expected to turn toward stronger private consumption and investment."

"Boosting domestic consumption will be a priority in China, through improved access to finance for small enterprises and households and stronger corporate governance and social safety nets to reduce precautionary saving," the report added.

As per the report, in which the IMF stated that Asia's gross domestic product is likely to go up by 7% in both 2010 and 2011, the strength in final domestic demand in China is projected to have optimistic spillovers for other Asian economic systems, mainly exporters of commodities and capital goods.

The IMF said, "The global recovery has evolved better than expected, with activity recovering at varying speeds, tepidly in many advanced economies but solidly in most emerging and developing economies."

The world economic system, which fell 0.6% during the last year, will improve steadily in 2010 and 2011, developing by 4.2% and 4.3% respectively, the IMF said. (With Inputs from Agencies)