CHINA TOPS IN INTERNET USAGE

25 July 2008

More online than the U.S.A.


According to a report from the China Internet Network Information Centre this week, China's booming Internet population has overtaken that of the United States to become the planet's biggest, with 253 million people online despite government controls on Web use.

The government body said that Web use statistics as at end June 2008 showed a 56 percent increase from a year ago....and there is still room for rapid growth, as this represents only 19.1 percent of the total Chinese population.

Associated Press reports that the United States had an estimated 223.1 million Internet users in June 2008, according to research firm Nielsen Online, whilst the Pew Internet and American Life Project puts U.S. online penetration at 71 percent.

"This is the first time the number has drastically surpassed the United States, becoming the world's No. 1," a CNNIC statement said.

The Associated Press report comments that China's communist government encourages Internet use for business and education but tries to block access to Web sites deemed pornographic or subversive. Web surfers have been jailed for posting or e-mailing material that criticises communist rule or is deemed a violation of vague national security laws.

In financial terms, China's market lags behind those of the United States, South Korea and other economies. But online commerce, video sharing and other businesses are growing rapidly and have raised millions of dollars from investors.

The commercial boom has produced success stories such as games site Tencent.com and search engine Baidu.com, which are competing with foreign rivals for local market share. Baidu revealed this week that its profits in the latest quarter soared 87 percent over the year-earlier period to 265 million yuan ($38.6 million).

The research firm Analysys International reported this week that total revenues for China's Internet companies soared to 40.5 billion yuan ($5.9 billion) in 2007, up 48.6 percent from the previous year. It said revenues should keep growing at an annual rate of at least 30 percent in coming years, reaching 137.5 billion yuan by 2010.

By contrast, U.S. online advertising revenues alone in 2007 were $21.2 billion (145.2 billion yuan), according to a report by consulting firm PricewaterhouseCoopers for the Interactive Advertising Bureau.

BDA China Ltd. predicts that China's Internet population should keep growing by 18 percent annually, reaching 490 million by 2012 — a number larger than the entire U.S. population.

Internet companies are looking forward to a new growth spurt once Chinese mobile phone carriers roll out third-generation, or 3G, technology that can support Web-surfing and other services. No date has been announced, but with more than 500 million mobile accounts, China has a vast pool of potential wireless Internet users.

Chinese fixed-line carriers have responded to the threat of more mobile users by expanding into broadband Internet, Web-based cable television and other services. The CNNIC report said that as a result, 214 million Chinese now have high-speed access.

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