China ties US for most Web users at 221 million people

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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.

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