The information technology (IT) industry is a pillar of China's national economy. It has developed rapidly since the market opening and reform policy was introduced. The IT industry contributes more than any other industry to the growth of the national economy as measured by output value and sales revenue. IT is one of forty industries in the industrial sector; its market share increased from 3.1 per cent in 1990 to 8 per cent in 1999. The IT industry has developed more rapidly than any other Chinese industry and has the largest output, best profits and largest export turnover. In this chapter, I will discuss the development of the IT industry in China, focusing on its rapid development, and drawing attention to some structural and other problems. 1 I will discuss the impact of the US economic slowdown and how China's entry into the World Trade Organization (WTO) will affect the industry. I will limit my discussion to the manufacturing and software industry, although the industry also includes telecommunications.
From 1990 to 1999, the Chinese IT industry grew by 32.1 per cent per annum, compared with a total industry figure of 14.2 per cent and national economy growth of 9.7 per cent. In 2000, the output of the IT industry exceeded US$120 billion, sales revenue increased by 34 per cent to US$70 billion, and profits and taxes grew by 66 per cent to US$6.7 billion. Exports reached US$55.1 billion, up by 41.2 per cent from 1999. In 2000, the IT industry created value added of US$l6.7 billion, which accounted for 1.54 per cent of gross domestic product (GDP), compared with 1.29 per cent in 1999. Table 6.3.1 compares value added of the IT industry for 1995-2000 with GDP growth over the same period.
At the end of 2000, there were 229 million telephone subscribers in China, 85.26 million of whom were mobile phone subscribers. At the end of July 2001, there were 160 million fixed-line telephone subscribers and 120.6 million