China overtakes U.S. as largest Internet market

China is now the world's largest Internet market, surpassing the United States in the number of users, research firm BDA reported.

BDA cited data from the China Internet Network Information Center (CNNIC), which placed the total number of users in China at 210 million at the end of 2007; and data from Nielsen/NetRatings, which put the U.S. Internet population for the same period at 216 million.

"Based on these sources and the assumption that these markets have continued to grow in 2008 to date at the same rates that they grew in 2007, we can conclude that China has by now comfortably surpassed the United States as the world's largest Internet population," said Bin Liu, BDA's Beijing-based principal analyst for new media.

"A buoyant economy, massive investments in broadband infrastructure and strong consumer demand for applications including online games, instant messaging and online-music and online-video sharing are fuelling China's rapid Internet growth," said Duncan Clark, BDA chairman.

BDA estimates 2007 revenues from China's online games sector at $1.88 billion. This estimate exceeds the combined estimated revenues from online brand advertising ($930 million) and search ($395 million), according to BDA.

The research firm placed the number of online game players in China at 50.4 million at the end of 2007. On the other hand, the "QQ" instant messaging client from Shenzhen-based Tencent reportedly had 280 million active users by Q3 07.

On value of Internet content, advertising and e-commerce, BDA said the United States is still far ahead of China, but added that it expects e-commerce to be the next booming sector as businesses and retailers start to take advantage of mass market consumers already online.

"Over time, BDA expects China to emerge as part of an Asian 'New California'—together with highly developed Asian markets such as Japan and South Korea—where innovative applications and companies help shape consumer trends globally," noted Clark.