Why China’s mobile internet use is surging

There are some worrying signals on the trajectory of China’s economy.

The country has just seen a spectacular stock market collapse that was exacerbated by huge amounts of margin lending to retail investors. Blackrock has warned of an “alarming” rise in private sector debt.

GDP growth is now slowing faster than many expected just 12 months ago. A lower-than-expected result for Apple iPhone sales this week triggered talk of “a widespread demand reset from China”.

It is an increasingly concerning picture.

Just because China’s pace of growth is slowing doesn’t mean the economy overall is tanking. Far from it. China is still a huge and growing consumer market, where the business opportunities are vast.

Take smartphone use.

The number of Chinese accessing the internet via smartphones is growing at an incredible rate.

According to Xinhua, citing a research report from the China Internet Network Information Center (CINIC), internet traffic through mobile devices surged by 36.79 million in the first six months of 2015, taking the total number accessing the web through smartphones to 594 million.

It’s 89% of China’s 668 million internet users, up from 85.8% at the end of 2014.

For some perspective, the total number of people accessing the web in China is more than double the entire population of the United States.

Or, if you prefer, 28 Australias.

The chart below, courtesy of CINIC, shows the growth in the number of Chinese accessing the internet through smartphones.

150727-China mobile internet users BI
Statistical Report on Internet Development in China

The top three most frequently-used applications for Chinese smartphone users are instant messaging, search engines and online news, but the growth in smartphone internet users has also increased the use of mobile payment, mobile shopping and other business-related apps. This growth in devices has become a major engine of China’s internet economy, according to the report.

A separate report in China’s People’s Daily notes online payments, shopping and travel booking services via mobile phones rose 26.9%, 14.5% and 25% respectively in just the past six months.

And there room for more growth. A lot more growth.

More than 700 million Chinese are still not accessing the internet at this point.

The future expansion of this market is truly mind-boggling, particularly in rural areas.

CINIC believes that only 186 million rural Chinese currently access the web, something that has massive implications for growth given advances in mobile technology.

Earlier this week the South China Morning Post reported that “hundreds of millions of Chinese mobile phone users will have access to much faster internet as soon as the first half of next year, thanks to a key technology development with strong support from the central government to significantly improve internet speeds”.

According to Maggie Cui, vice president in charge of wireless operation at ZTE, the company has been working with China Mobile, the world’s largest mobile phone operator, to test so-called “pre-5G” connections, which could be more than 10 times faster than current 4G mobile internet, according to the report.

The technology advancement could see China’s mobile phone market, already the largest in the world, grow at an even faster rate as substandard internet speeds improve. At present Chinese internet speeds are not in the top 80 nations globally.

So with technology set to improve rapidly at the same time China’s middle class numbers swell, it appears as certain as you can get that the numbers accessing the internet via smartphones will continue to surge higher in the years ahead.

This article is published in collaboration with Business Insider. Publication does not imply endorsement of views by the World Economic Forum.

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Author: David Scutt is a Global markets and economics reporter for Business Insider.

Image: Men are silhouetted against a video screen as they pose with Samsung Galaxy S3, Nokia Lumia 820 and iPhone 4 smartphones (R-L). REUTERS/Dado Ruvic.

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