Passenger car sales in China rose 48% year on year in June, the biggest jump since February 2006 on the back of a government stimulus to encourage spending, according to the China Association of Automobile Manufacturers.

872,900 cars, sport-utility vehicles and other passenger vehicles were sold in the country last month. Overall sales, including buses and trucks, rose 36% to 1.14m.

The government’s US$585bn economic package has helped China pass the US as the world’s largest auto market this year.

The trade association has raised its full year vehicle sales forecast to more than 11m from 10.2m previously after first half sales rose 18% to 6.1m. By comparison, US light vehicle sales plunged 35% in the first half to 4.8m.

China’s passenger vehicle sales climbed 26% to 4.53m in the first half while commercial vehicle sales fell 0.5% to 1.57m, the association said.

The Chinese Central bank said that rising auto sales added to evidence that China’s economy may have recovered from a slowdown in the beginning of the year. New loans rose almost five-fold in June from a year earlier to 1.53 trillion yuan.

General Motors, the largest overseas automaker in China, boosted its H1 sales 38% to 814,442 vehicles, and Hyundai Motor’s Chinese venture reported sales up 56% to 257,003.