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Thursday, 26 September, 2002, 10:48 GMT 11:48 UK
Who's online in China?
Laptop PCs on display
More people can afford to own their own PC

Liu Hong reckons she's an addict: "I am becoming more and more dependent on the internet."

I have to phone them first to tell them to open the email box

Liu Hong

Three days is the longest the 30-year-old civil servant can last without logging on to swap gossip and photos with her friends and browse through online fashion magazines.

Internet use has rocketed since China threw open its networks to the world wide web in 1994.

As part of its drive to modernise the economy, China's government wants to see 5% of economic growth coming from information technology by 2005.

Digital divide

To achieve this it has poured money into upgrading telecoms systems, with spectacular results.

By mid-2002, China had leapt to second place in the world with 45 million internet users, compared to just half a million in October 1997, when the official web data collector CNNIC began keeping records.

Teenagers using a PC
Teens are keen surfers

But although young, urban professionals like Liu Hong and her husband are increasingly at home online, China has a gaping digital divide.

Forty-five million internet users may sound a lot, but it is only 3.6% of the vast population of 1.3 billion.

The chasm is both social and geographical.

Nearly half of China's surfers - 44% - are students or professionals, and half the country's websites are based in its three richest cities, according to CNNIC.

Liu Hong works for the government of a western province which has been selected for a development drive.

But her e-mails go mostly to friends abroad, not local friends or colleagues because "I have to phone them first to tell them to open the e-mail box."

The most web-savvy age-group are 18-24-year-olds, who make up one-third of internet users, although the proportion of younger teenagers online is rising fast too.

Cheaper phone costs

The growth of internet use has received a massive boost from cuts in telephone tariffs in the last year and a half.

In an unusual example of officially sanctioned public criticism, China Telecom's pricing policy came under fire in a televised discussion forum.

MII's fear is with cable modems people wouldn't bother getting fixed lines anymore

Duncan Clark, BDA China
Since then it has slashed tariffs in half and cut the fee for getting a phone line from about 3,000 yuan ($365; 233) to nearer 200 yuan.

That and falling PC prices have made getting an internet connection far more affordable, so that students in some Beijing colleges have installed connections in their dormitories, "every six bunks or so", says Duncan Clark, managing director of BDA China, a firm of independent IT analysts.

Students with internet access remain a minority, but government efforts to boost their numbers are paying off.

A new college network has increased the number of students online from 4 million to 12 million in the 18 months to July 2002.

It was just part of massive investment in China's telecom sector, which reached 255bn yuan last year alone, according to BDA China.

Slow to get faster service

But the development of the internet in China is being crippled by territorial battles between competing government ministries, analysts say.

Broadband internet, which provides fast data transmission and can remain on all the time, is particularly important for business use.

Only about 2 million users have a broadband connection, putting China way behind South Korea, which has broadband in more than 60% of homes and leads the world, says Mr Clark.

The trouble, he believes, is "a very deep and bitter rivalry" between the Ministry of Information Industry (MII), which oversees the phone companies, and the State Administration for Radio Film and Television (SARFT), which deals with cable TV networks.

A small boy playing an online game
Games are popular but frowned on by the government

Cable TV delivery systems can also pipe in broadband but regulations prevent the numerous local cable networks from doing so.

"MII's fear is with cable modems people wouldn't bother getting fixed lines anymore," says Mr Clark.

Mobile phone use in China is also booming.

Other rules limit broadband take-up by blocking original content, partly for reasons of censorship and partly because of ministerial struggles.

"Any content that is aired on a broadband network must have already been aired on a terrestrial channel," says Mr Clark.

Decisions await reshuffle

Last year a panel of top government leaders was set up to streamline decision-making about the future of telecoms, but it has not done much yet.

Like most analysts, Mr Clark thinks: "Probably nothing will happen till after the Party congress [in November]".

The 16th Congress of the China's Communist Party has stalled government business for months as officials are busy with the implications of the major leadership reshuffle which is expected to take place.

President Jiang Zemin and Prime Minister Zhu Rongji are just two of the top leaders reaching retirement age.

Meanwhile, market economics is giving broadband a push - developers are piping it into new apartment blocks to make their buildings more desirable to buyers.

Internet expansion is also partly being driven forward by Beijing's successful bid to host the 2008 Olympic Games, when a flood of TV crews, journalists and tourists are certain to put China's digital infrastructure under a global spotlight.

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