In 2012, business revenue of the Chinese telecommunications industry recorded the fastest annual growth since 2009. China has the world’s largest base of landline subscribers; however structural changes within the industry and rapid mobile phone adoption have caused a decline in landline voice services.

The number of Chinese internet users reached 564mn in 2012, spending on average 20.5 hours each week to access the internet. Penetration rates were high in well-developed provinces but high growth rates were achieved in less-developed provinces. Almost two-thirds of broadband users had internet access speed of 4Mbps and higher.

Meanwhile, smartphone sales gained momentum in smaller cities. The number of mobile internet users increased by 12.8% year on year in 2012, exceeding the milestone of one billion users. As of February 2013, there were 1.13bn mobile users in China, out of which nearly 23% were 3G subscribers. The rising security threats in mobile apps have gradually raised the awareness among Chinese mobile internet users.

China is prepared to launch a new round of fiscal support for the Internet of Things (IOT) industry through a special fund for technical innovation and tax incentives.

Key Points:

• Entry-level smartphones will drive sales and penetration in rural China

• Gross transaction value of third party mobile payment is estimated to surpass RMB400bn by 2015

• Industry output value of Internet of Things (IOT) is expected to reach RMB500bn by 2015

• China aims to commercialize TD-LTE in 2013 by providing network coverage to over 500mn population