China Ties U.S. In Internet Users

China's fast-growing population of Internet users has soared to 221 million, tying the United States for the largest number of people online, according to government data reported Thursday.

The figure, reported by the Xinhua News Agency, reflects China's explosive growth in Web use despite government efforts to block access to material considered subversive or pornographic. It was a 61 percent increase over the 137 million Internet users reported by the government at the start of 2007.

China lags the United States, South Korea and other markets in online commerce and other financial measures. But e-commerce, video-sharing and other businesses are growing quickly and companies have raised millions of dollars from investors.

"We'll see this growth continuing," said Duncan Clark, chairman of BDA China Ltd., a Beijing technology company.

"Even though China might overtake the United States in total (Internet) population, it still lags in the size of its Internet industries, and there will be a lot more opportunities," Clark said.

China's Internet penetration is still low, with 16 percent of people online, compared with a world average of 19 percent, Xinhua said.

Beijing promotes Internet use for business and education but operates extensive online censorship. Web surfers have been jailed for posting or e-mailing material that criticizes Communist rule or is deemed a violation of vague national security laws.

Most recently, Chinese Web surfers have been blocked from seeing foreign sites - including YouTube.com - with videos about protests in Tibet and the security crackdown there.

The Xinhua report cited data from the government's China Internet Network Information Center. An agency spokeswoman, who would give only her surname, Zhang, declined to give more details. She said the agency, also known as CNNIC, would release a report in July.

The United States had 221 million Internet users in March, according to Nielsen/NetRatings, a leading industry measurement service. The U.S. growth rate is lower, suggesting that when March figures for China are released they may show that the country has already overtaken the United States.

Some 75 percent of American adults already are online, and the rate for teenagers is even higher, according to the U.S.-based Pew Internet and American Life Project.

By contrast, BDA's Clark said China's Web population should keep growing by 18 percent annually, reaching 490 million by 2012 - a number larger than the entire U.S. population.

The boom has produced Chinese success stories such as games site Tencent.com and search engine Baidu.com, which are competing with foreign rivals for market share.

Internet entrepreneurs have hit bumps along the way, including having to contend with censors trying to keep pace with rapid change in the industry.

A key development has been video-sharing, a newly popular area where some sites say they get 100 million visitors a day - equal to the audience for the biggest state TV channels.

In March, the government said it would shut down 25 video sites and punish 32 others for violating new rules against carrying content that is pornographic, violent or a threat to national security.

The Internet's mushrooming popularity has been driven in part by a regulatory quirk: Fixed-line phone companies are losing potential new customers to mobile phone services but are barred from getting into that market themselves. So they are trying instead to bring in new revenues by promoting low-cost broadband Internet access, which has brought high-speed service to millions of homes. Phone companies also are experimenting with Internet-based cable television.

Web businesses are looking for another boost when Beijing takes the long-anticipated step of issuing licenses for third-generation, or 3G, mobile technology to support video, Web-surfing and other services. No date has been set.

With the world's largest mobile phone market, at 520 million accounts, China has a vast potential pool of wireless Internet users.

"There will be a lot more opportunity to move online," Clark said.