Summary
China is committed to keep the economy growing in the midst of the global financial crisis. The State Council initiated a massive infrastructure spending program as part of an active fiscal stimulus plan aimed at boosting the country's slowing economy. Targeting GDP growth of around 6%, China attained actual growth levels of 8.7% and was one of the first country's to lead the global economy out of a recession. This was driven by massive infrastructure developments and the propensity of the current generation to spend on ¡®necessities' that were seen as luxuries not so long ago. In addition, China is actively expanding its political and economic ties with major emerging markets, such as Latin America, Africa and the Middle East. According to the International Monetary Fund, China's share of worldwide GDP is to grow from 1.7% in 1991 to an expected 11.1% in 2014. This highlights the massive change underway in China. Telecommunications is an important vehicle to drive through this radical shift in economic prosperity and culture.
China's entire telecommunications market will generate around  US$130 billion in 2010, making it the second largest telecoms services market in Asia Pacific after Japan. The market is expected to increase at a compound annual growth rate of 8.8% between 2009 and 2014, reaching US$187 billion by 2014, surpassing Japan as the largest telecommunications services market in Asia.
In the past five years, as one of the country's 'pillar industry', China's telecom service industry has grown at a faster rate than the Country's GDP. According to official statistics from the Ministry of Industry and Information Technology (MIIT), telecommunications business contributed approximately 4.3% of the country's GDP in 2009.
The industry restructure was finalised in 2008 resulting in a more level playing field and the market was seeing significant competition between the newly formed full-services operators. Due to the continued massive take-up of mobile services, the total number of telephone subscribers broke through the one billion subscriber mark in 2009 and the number of mobile subscribers alone was on track to reach 800 million by mid 2010. Use of the Internet in China has also grown at a phenomenal pace reaching 400 million users into 2010 after already passing the US in 2008 to become the world leader. Another noticeable element is that of users accessing the internet via mobile phones.
The newly formed China Mobile, China Telecom and China Unicom competed fiercely in 2009 in establishing the companies as full-service operators. The mobile sector was still expanding at over 15% per annum going into 2010, with the roll-out of 3G services well underway. Entering 2010, with far more handsets on the market and pricing coming down to more realistic levels, the take-up of 3G was accelerating, but was still far below the level required to meet the MIIT target of 150 million subscribers by 2011. In fact, with numbers still short of 20 million by end Q1 2010, the prospects of reaching 100 million by end 2011 were looking decidedly optimistic. However, with such aggressive government support and the world watching, particularly the TD-SCDMA roll-outs, it is certain that the three operators will be scrambling to meet this stretch target.
China's spiralling online population has turned the Internet into a forum for citizens to express their opinions in a way rarely seen in a country where the traditional media is under strict government control. The internet has had a subtle unifying effect on China. The diversity of Chinese dialects, often an obstacle to comprehension of the spoken word, does not limit written comprehension.
However, Internet development and application in China is imbalanced regionally, and between urban and rural areas. In 2009 China Mobile continued to pursue the rural market development strategy. The company took advantage of State policies to reduce development costs for the rural market and took a first-mover advantage in rural markets. While urbanisation progresses in rural areas, this market presents significant potential and as such the rural market continues to be a key growth driver.
The three full-service operators are expected to compete aggressively in 2010 and into 2011. Value-added services will continue to grow as revenue from traditional voice services continues to decline. The convergence across telecommunications, internet, and radio and TV broadcasting networks will form a new market beyond the traditional telecommunications industry. The huge popularity of the internet will continue to pervade all aspects of society as China strives to establish its innovation credentials.
China-Internet, broadband, IP telephony and telecoms statistics-2004; 2009, 2010
Sector | Year |
Internet | 2004 | 2009 | 2010 (e) |
Internet users (million) | 94.0 | 384.0 | 480 |
                Annual growth | 18.2% | 28.9% | 36.1% |
Internet subscribers (million) | 71.7 | 111.9 | 121 |
Number of Chinese websites (million) | 0.67 | 3.2 | 3.3 |
Broadband subscribers (million) |
DSL | 16.9 | 83.9 | 100 |
Total | 25.8 | 103.6 | 125 |
Subscribers to telecoms services (million) |
Fixed-line telephone subscribers | 311.7 | 313.7 | 290 |
                Penetration | 24.0% | 23.6% | 21.7% |
Mobile phones | 317.2 | 747.3 | 860 |
                Penetration | 24.4% | 56.3% | 64.2% |
(Source: based on MIIT, ITU and CNNIC data)
Market highlights:China had close to 1,100 million phone users by mid-2010, including mobile phones, fixed-line phones and PHS handsets. Mobile subscribers comprised over 70% of the total. 3G deployments started but take-up was slower than expected. China Mobile' s TD-SCDMA network was the most popular into 2010 but not as significantly as was anticipated. China Telecom had made astonishing progress with the CDMA network while China Unicom's WCDMA network had the least number of subscribers. China can expect significant growth in mobile Internet use as 3G take-up increases. Going into 2010 the number of mobile Internet users reached 233 million, accounting for 60.8% of the total number of internet users.The total number of broadband subscribers continued to grow from over 120 million by mid-2010, representing the largest number of broadband subscribers worldwide and accounting for 45% of net-adds worldwide in Q1 2010.China's FttX roll-outs gathered momentum and reached over 15 million subscribers by end 2009 and expected to gain another 10 million subscribers during 2010. China Telecom captured 80% of the market and China Unicom the remainder. China Mobile was still to start any major roll-outs. The industry restructure has caused operators to evaluate their spending patterns, with a large amount going to broadband infrastructure. The contribution from value-added business increased substantially. China Mobile's value-added business contributed nearly 30% to the Group's total operating revenue due to the continued expansion of the major service offerings such as SMS, Color Ring, MMS, Handset Internet Access, Mobile Music, Mobile Paper and the instant messaging service.In 2010, China Mobile, signed a deal to buy a 20% stake in the Shanghai Pudong Development (SPD) Bank, partly owned by Citigroup. This deal is significant due to the huge potential for mobile payments in the short-term and securing the digital assets of subscribers in the long-term.China's three telecom operators were accelerating plans to roll out mobile TV services in order to gain market share for 3G services. All three operators planned to rely mainly on the China-developed China Multimedia Mobile Broadcasting (CMMB) mobile TV standard to deliver their mobile TV services to both their 2G and 3G customers.The Internet population had reached over 400 million users by May 2010. The government aims to make the net available to 50% of its 1.3 billion population in the coming five years which would take the total to over 650 million by 2015 and reaching almost 40% of the vast rural population.In early 2010 the Chinese government revealed a plan to speed up the merging of the country's telecom, broadcast television and internet networks, as part of its efforts to advance its information and cultural sectors. In a cabinet meeting presided over by premier Wen Jiabao, China mapped out the merger plans as follows: to work on the merger of broadcast TV and telecom networks in 2010-2012 on a trial basis; to include internet networks into its merger efforts in 2013-2015.The top three countries in terms of total cable TV subscribers in 2009 were China, the United States and India, with China leading the pack with 175 million subscribers.For those needing high level strategic analysis and objective analysis on China, this report is essential reading and gives further information on:
Orders by the MIIT in 2009 for China Telecom and China Unicom to close their Xiaolingtong (Little Smart) wireless service by end-2011. Aims by the government to broadcast all TV programs in digital format by 2010 and complete cable TV digitisation by 2015. Explosive growth in Chinese Internet use, which is driving a sharp rise in profits at online companies such as Taobao; Alibaba; Tencent and Baidu. Online gamers, online music use, online video use, internet shopping and social networking continues to rise together with online advertising spend.The launch of a mobile TV service in 2010 by China Mobile and state-backed China Broadcast Corporation (CBC) using the locally-developed CMMB standard. The network  offered access to six channels at an initial price of RMB 6 (US$0.88) per month.China's increasing investment in its worldwide connectivity through submarine and terrestrial cable links and a massive satellite deployment operation covering not only telecommunications but also GPS and research activities.China Unicom putting the finishing touch on the tests on its HSPA+ networks in Guangzhou, Shenzhen, and Zhuhai, which were kicked off in October 2009.Apple's iPhone being offered by China Unicom in October 2009 and China Mobile selling its own version of the iPhone in 2010, dubbed the OPhone.The State Grid Corporation of China starting a FttH trial in Shenyang, The entry of the state-backed electric company alters the competitive landscape with a new player that has massive resources and ready access to homes via the grid.China's expected investment of US$7.32 billion in the Smart Grid sector in 2010. China is predicted to be one of the hottest Smart Grid markets in the coming years given that its energy needs are expected to double in 10 years, and the country's dominant power distribution company, State Grid Corporation has a goal of building out a Smart Grid by 2020.The launch of the Compass GPS satellite in 2009, one of the 35 that China planned to put into orbit by 2015. The satellites will form the Beidou Navigation System (BNS), a global positioning system completely developed by Chinese technology. The system will provide services for transportation, meteorology, petroleum prospecting, disaster forecasting, telecommunications and public security. China plans to launch 10 satellites by the end of 2010.Data in this report is the latest available at the time of preparation and may not be for the current year.

Table of Contents
1. Country Overview
1.1 Background
1.2 China's economy
2. Key Statistics
3. Telecommunications Market
3.1 Overview of China's telecom market
3.1.1 Overview of China's telecom market-1980s
3.1.2 Overview of China's telecom market-1900s
3.1.3 Overview of China's telecom market-2000-2007
3.2 China's telecom market restructure in 2008
3.3 Overview of China's telecom market-2008-2010
3.4 Telecommunications market sectors
3.4.1 Fixed lines and mobiles
4. Regulatory Environment
4.1 Overview
4.2 Tenth Five-Year Plan (2000-2005)
4.3 Eleventh Five-Year Plan (2006-2010)
4.4 Ministry of Industry and Information Technology (MIIT)
4.4.1 Ministry of Information Industry (MII)
4.4.2 MII expansion
4.4.3 Ministry of Industry and Information Technology (MIIT)
4.5 China Internet Network Information Centre
4.6 Previous restructuring of the telecommunications operators
4.7 World Trade Organisation accession
4.8 Internet regulations and censorship
4.9 Yearly summaries of major regulatory developments
4.9.1 Year 2010
4.9.2 Year 2009
4.9.3 Year 2008
4.9.4 Year 2007
5. Major Operators
5.1 Overview of industry restructure
5.1.1 2002 industry restructure
5.1.2 Drivers for business restructuring in China-2007
5.1.3 2008 industry restructure
5.1.4 Newly formed entities-2008
5.2 China Mobile Ltd (CML)
5.2.1 Company overview
5.2.2 Company background
5.2.3 China Mobile: Financial statistics
5.2.4 China Mobile: Operations statistics
5.2.5 China Mobile: Business operations strategies
5.2.6 Recent developments
5.2.7 China Mobile investments and the development of m-commerce
5.2.8 China Tietong (merged into China Mobile)
5.3 China Telecom
5.3.1 Company overview
5.3.2 Company background
5.3.3 China Telecom: Financial statistics
5.3.4 China Telecom: Operations statistics
5.3.5 China Telecom: Business operations strategies
5.3.6 Recent developments
5.3.7 China Satcom (merged into China Telecom)
5.4 China Unicom
5.4.1 Company overview
5.4.2 Company background
5.4.3 China Unicom: Financial statistics
5.4.4 China Unicom: Operations statistics
5.4.5 Recent developments
5.4.6 China Netcom (merged into China Unicom)
5.5 China Communications Services
6. Telecommunications Infrastructure
6.1 Infrastructure developments in China
6.1.1 Overview of infrastructure developments in China
6.1.2 Internet infrastructure developments in China
6.1.3 China's RMB4 trillion for infrastructure spending
6.2 National telecom networks
6.2.1 Backbone Internet networks
6.3 International infrastructure
6.3.1 Submarine cable infrastructure
6.3.2 Terrestrial cable infrastructure
6.3.3 Satellite infrastructure
6.3.4 International outlet bandwidth
6.4 Next Generation Networks (NGN)
6.5 Fibre optic networks
6.6 Other infrastructure developments
6.6.1 China's world first eco city
6.6.2 China's own Silicon Delta
6.6.3 World Expo 2010 Shanghai
7. Internet Market
7.1 Overview
7.2 Internet addiction
7.3 Rural connectivity
7.4 Product ownership
7.5 Internet statistics
7.5.1 China in global terms
7.5.2 China Internet users
7.5.3 China Internet subscribers
7.5.4 Number of Internet users by province and economic development
7.5.5 Internet statistics-CNNIC statistical survey
7.5.6 Mobile Internet users
7.5.7 Basic Internet resources
8. Broadband Market
8.1 Overview
8.2 Broadband statistics
8.2.1 Operator broadband subscribers
8.2.2 Broadband subscribers by access type
8.3 Broadband technologies
8.3.1 Overview
8.3.2 Cable modems
8.3.3 Digital Subscriber Line (DSL)
8.3.4 Fibre-to-the-Home (FttH)
8.4 Wireless broadband
8.4.1 Wireless Local Area Networks (WLANs)
8.4.2 WiFi
8.4.3 World Interoperability for Microwave Access (WiMAX)
8.4.4 Multi-carrier Wireless Internet Local Loop (McWiLL)
8.4.5 Wireless Authentication and Privacy Infrastructure (WAPI)
8.5 IP telephony/Voice over Internet Protocol (VoIP)
8.5.1 Market overview
8.6 Broadband TV
8.6.1 Overview of media convergence
8.6.2 Triple play background
8.6.3 Regulatory developments on media convergence
8.6.4 Convergence trials
8.7 Internet Protocol TV (IPTV)
8.7.1 IPTV background
8.7.2 IPTV statistics
8.7.3 IPTV projects
8.7.4 Regulatory issues
9. Broadcasting
9.1 Television broadcasting overview
9.2 Cable TV
9.2.1 Background to cable systems
9.2.2 Cable TV market overview
9.2.3 Cable TV market statistics
9.2.4 Digital Cable TV
9.2.5 Major cable TV players
9.2.6 Next Generation Broadcasting network
9.3 Satellite TV
9.3.1 Market overview
9.3.2 Regulatory issues
9.3.3 Major satellite TV players
9.4 Digital Terrestrial TV (DTTV)
9.4.1 Market overview
9.4.2 Government targets
10. Digital Economy/Digital Media
10.1 Internet growth
10.2 E-Services Overview
10.3 E-Commerce
10.3.1 E-Commerce background
10.3.2 E-Commerce progress
10.3.3 E-Commerce volumes
10.3.4 E-Payment systems
10.4 E-Government
10.4.1 Government E-Commerce projects
10.5 E-Entertainment
10.5.1 Online gaming
10.5.2 Online video
10.5.3 Online music
10.5.4 Social networking
10.5.5 Instant Messaging (IM)
10.5.6 Shanghai Media Group
10.6 Search engines
10.6.1 Global search engine market
10.7 E-services
10.7.1 Online recruitment
10.7.2 Online real estate
10.7.3 Online advertising
10.7.4 Online travel service
10.7.5 Online shopping
10.7.6 Online education
10.7.7 Online banking
10.8 OnLine companies
10.8.1 Alibaba
10.8.2 Tencent Holdings
10.8.3 Sina
10.8.4 Baidu.com
10.8.5 Easou
10.8.6 PayPal
10.9 Digital Economy
10.9.1 Smart Grids
10.10 Digital Media
11. Mobile Communications
11.1 Overview of China's mobile market
11.2 Mobile statistics
11.2.1 Mobile subscribers 1995-2011
11.2.2 Mobile subscribers by operator
11.2.3 Prepaid cards (SIM and PIM cards)
11.3 Mobile technologies
11.3.1 PAS/PHS (Little Smart/Xiaolingtong)
11.3.2 GSM
11.3.3 General Packet Radio Service (GPRS)
11.3.4 Enhanced Data for GSM Evolution (EDGE)
11.3.5 CDMA
11.3.6 HSPA+
11.4 Third Generation (3G) mobile
11.4.1 Background
11.4.2 3G Licences
11.4.3 3G Investments
11.4.4 3G developments
11.4.5 3G statistics
11.5 3G Technologies
11.5.1 TD-SCDMA
11.5.2 WCDMA
11.5.3 CDMA2000
11.6 Fourth Generation (4G) mobile
11.7 Mobile handset market
11.7.1 Overview
11.7.2 3G TD-SCDMA handsets
11.7.3 Smartphone market
11.7.4 Android
11.7.5 Blackberry
11.7.6 iPhone
11.7.7 Netbooks
11.7.8 'LifePad'
11.8 Mobile data services
11.8.1 Short Message Service (SMS)
11.8.2 Wireless Application Protocol (WAP)
11.8.3 Multimedia Messaging Service (MMS)
11.8.4 Push-to-Talk (PTT)
11.9 Mobile TV
11.9.1 Overview
11.9.2 Market size
11.9.3 Mobile TV Standards
11.9.4 Mobile TV developments
11.10 Mobile applications
11.10.1 Market overview
11.10.2 M-commerce
11.10.3 M-payment
11.10.4 Mobile gaming
11.10.5 Instant Message (IM) search services
11.10.6 Ringtones
11.10.7 Mobile music
11.10.8 Mobile Internet
11.10.9 Applications entering the market
12. Forecasts
12.1 Forecast fixed-line subscribers-2010; 2011; 2015
12.2 Forecast Internet users-2010; 2011; 2014
12.3 Forecast broadband subscribers-2010; 2011; 2015
12.4 Forecast FttX subscribers-2010; 2011; 2015
12.5 Cable TV market forecasts-2010; 2011; 2015
12.6 Digital cable TV market forecasts-2010; 2011; 2015
12.7 IPTV forecasts
12.8 Forecast Mobile subscribers 2010; 2011; 2015
12.8.1 Forecast: Total mobile subscribers 2010; 2011; 2015
12.8.2 Forecast 3G mobile subscribers 2010; 2011; 2015
13. Glossary of Abbreviations
Table 1-Percentage share of global GDP-1991, 2014
Table 2-Country statistics China-2010
Table 3-Telecom revenue and investment statistics-2009
Table 4-Telephone network statistics-April 2010
Table 5-Internet user statistics-December 2009
Table 6-Broadband statistics-December 2009
Table 7-Mobile statistics-December 2009
Table 8-National telecommunications authorities
Table 9-Fixed-line and mobile subscriptions and penetration rate-1998-2011
Table 10-China's telephone subscribers fixed versus mobile overview-1998-2010
Table 11-China Mobile revenue, capex, EBITDA margin, net profit-2000-2009