On January 18 this year, the China Internet Network Information Center (CNNIC), a non-profit organization modeled after InterNIC in the U.S., published its fifth semi-annual survey report on Internet development in China. The report reveals that China's Internet population by the end of 1999 was 8.9 million, up from 4 million six months ago and 2.1 million at the end of 1998. The CNNIC report is available on CNNIC's Web site (www.cnnic.net.cn). This article is written to help people who are interested in China Internet business to better understand the CNNIC report, and to give them a larger picture of China's Internet industry and market.

Let us first look at what other research institutions and consulting firms have had to say about China's Internet population and growth. International Data Corporation (IDC) has probably the most conservative estimates on China's Internet user growth. According to IDC's updated forecast in November 1999, China would have 3.79 million Internet users by the end of the year. However, another IDC report says that the number of Internet users in China is expected to exceed that of Australia in 2001, and that of Japan in 2002, to give China the top spot in Asia.

A widely cited report titled "The Internet in China," jointly published in July 1999 by BDA China and the Strategis Group, predicts China's 1999 year-end number of Internet users will reach 6.7 million, and the world's most populous country will become one of the world's largest Internet markets as early as 2003, with a user base of 33 million.

Research conducted in October 1999 by London-based The Phillips Group also predicts that China is expected to take Japan's present number one spot within the Asia-Pacific Region by the end of 2005. By then, China's Internet user base is expected to exceed 85 million, representing 37.64 percent of the entire Asia-Pacific user base as opposed to Japan's 33.54 percent share. Nevertheless, in terms of penetration of the population, only 6.58 percent of China's population in 2005 is expected to be online. By contrast, Japan's user base represents greater than 60 percent penetration.

Perhaps the boldest projection ever made on China's Internet population is the one made by the Boston-based Yankee Group in November 1999. Its study says that China will have more Internet users than any other Asia-Pacific nation by 2001, with about 40 million people online; and by 2005, it should surpass the U.S. and have the most Internet users in the world, the Yankee study said.

II. IS THE NUMBER OF CHINA INTERNET USERS REPORTED BY CNNIC CREDIBLE?