China's accelerating 'Internet revolution'

By John Ross
0 Comment(s)Print E-mail, June 7, 2015
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'E' irresistible [By Jiao Haiyang/]

China is further speeding up its "Internet revolution." Premier Li Keqiang has launched the concept of "Internet Plus," which emphasizes integrating the mobile Internet, cloud computing, big data and the Internet of Things with manufacturing and e-commerce. To further boost Internet use, the premier recently urged China's telecommunications operators to enhance Internet speeds and cut prices.

China's increasing emphasis on the Internet is even more impressive when viewed within the context of the existing volume of Internet use in the country. China already has the world's greatest number of Internet users by far, 642 million in 2014, compared to the United States' 280 million and India's 243 million. From a global perspective, 21 percent of the world's Internet users are in China, compared to only 9 percent in the U.S.

Equally striking is the buildup of China's investment in information and communications technology, the core of which is Internet technology. Over the last two decades, China's investment in ICT has already generated 1 percent of total GDP growth a year out of an average 8.8 percent annual expansion rate. As Table 1 shows, over the last 20 years, China's annual GDP growth created by ICT investment was already significantly higher than any other major industrial or BRIC economy. For example, it was two-thirds higher than that of the U.S., over twice that of Germany and three times that of Japan.

Table 1

Annual Total Percentage of GDP Growth Created by ICT Investment, 1994-2014









United States


United Kingdom








Source: Calculated from The Conference Board, Total Economy Database 2015

But even given this high level of achievement, China's further push into the Internet sector is vital to economic strategy. The Internet has now expanded far beyond its original application in computers to become the most rapidly growing sector of telecommunications, retailing and advanced manufacturing, hence the key idea of "Internet Plus."

But because China is a developing economy, despite its high number of Internet users, the percentage of China's population that is using the Internet is lower not only than rate of Internet use seen in the U.S. or Europe but also lower than that seen in developed Asian countries. In 2014 46 percent of China's population were Internet users, whereas this figure stood at 87 percent for the U.S., 86 percent in Japan and 92 percent in South Korea. In China, lowering the price of Internet connectivity is key to further expanding Internet use, hence the premier's drive to reduce Internet usage costs.

Because the Internet is crucial for the development of a modern economy, there have been numerous international studies of the Internet's development. These have arrived at clear conclusions showing why expanding Internet use and ICT investment are inextricably interlinked.

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