China To Overtake Australia As Asia/Pacific's Largest IT Market In 2000.

China is on the verge of overtaking Australia as Asia/Pacific's (excluding Japan) largest IT market. In 1999, China's IT market was over $11 billion and accounted for 21 percent of the area's IT revenues. IDC expects it will grow to over $14 billion this year.

"As an already-integrated part of the world economy, China currently lags behind the rest of the world in terms of IT adoption," says Ken Xie, general manager of IDC China. "However, both Chinese government policy makers and end users increasingly view IT adoption as a critical factor of China's membership in the international community. With this backing, China will experience strong growth in late 2000 and will maintain this strong growth throughout the next five years."

China's IT market will more than triple by 2004, when it will account for almost one-third of Asia/Pacific's IT market. Currently, hardware dominates the Chinese IT markets, accounting for almost 88 percent of China's IT spending in 1999. However, IDC does expect a change in the country's IT spending patterns. "As the computer installed base keeps growing, demand for software and services will grow," Xie said. By 2004, software and services will account for 15.8 percent and 9.6 percent of China's IT market, up from 6.9 percent and 5.3 percent, respectively.

Finance represents China's largest IT industry. In 1999, it accounted for almost 31 percent of IT revenues with $3.4 billion. Telecom was second with revenues of more than $2.1 billion and a market share of just under 20 percent. "The chief reasons for the fast growth of the finance sector is because of its mission-critical business nature and because of the fast booming of China's economy over the last 20 years," Xie said. "As for the telecom sector, the consumer market is obviously one of the major contributing factors."

IDC expects these two industries will continue to be China's largest consumers of IT products through 2004. However, their market shares will likely decrease as other industries bulk up there IT consumption.

China's Internet market will also experience substantial growth through 2004. By 2004, IDC forecasts more than 33 million Internet users in the country. The Internet economy could grow even faster than the number of users. IDC expects it will increase at a compound annual growth rate over 170 percent and surpass $114 billion in 2004.