China is gaining 240,000 Internet users per day and its online population will reach 500 million in about three or four years, said the Chinese Vice-minister of the State Council Information Office in a keynote address at the second US-China Internet Industry Forum held on Nov 7.

The market size of China’s Internet-based economy jumped 52.2% from the same period a year ago to reach 14.63 billion yuan (US$2.15 billion) in the third quarter of this year, an increase of 9.8% from the previous quarter. However, according to iResearch, the cyber economy‘s growth had slowed from 62.8% year-on-year and 14.9% q-o-q in the April-June period.

In Q3, advertising and gaming continued to be major generators of Internet business revenue, combining to account for 72.7% of total income of the web-based economy. Online games accounted for 37.4% market share, while advertising took up 35.3% share.

The market volume of Internet ads increased 12.7% to 5.16 billion yuan (US$756 million) in the third quarter, thanks mainly to the Beijing Olympics. The B2B e-commerce market grew only 0.7% to 1.46 billion yuan (US$213.8 million).

In late October, leading Chinese search engine Baidu finally launched its own online shopping platform, youa.com, to compete head-on with Alibaba’s Taobao.com, which had pretty much monopolized China’s C2C marketplace.

Alibaba.com, China’s largest ecommerce company, announced the company’s third quarter earnings had climbed 49% to reach 308.6 million yuan (US$45.2 million), up from 207.3 million yuan a year ago. However, Q3′s profit growth pales in comparison to the 159% surge in the prior quarter.

Through the first 9 months of 2008, Alibaba had registered net profit growth of 100% year-on-year. Alibaba’s international marketplace attracted a record number of registered users, increasing 74% year-on-year.

Graphic: China’s Internet Economy, Source – iResearch