China's information technology (IT) market, which has hoisted both employment and gross domestic product, is expected to grow another 14 per cent in 2006 from last year, according to market research released yesterday.

US technology research house International Data Corporation (IDC) projected IT spending in China will hit US$34.8 billion this year, compared to US$30.5 billion in 2005.

"China's IT market is on the right track," said IDC in a white paper sponsored by US-based Business Software Alliance (BSA).

Information technology is playing an increasingly bigger role in China's economic miracle, the research noted.

"Since 1989, IT has accounted for just 2 per cent of GDP growth (in China). By 2005, the importance of IT had increased by almost 500 per cent, accounting for almost 10 per cent of GDP growth."

The report said by the end of 2006, the IT sector will have added 1 million new jobs to the Chinese economy since 2003.

By the end of this year, those new jobs and IT spending will have pumped almost US$3.2 billion into the economy since 2003.

More than half of those new jobs created by the IT sector will be software-related.

Though the software industry only accounted for 10 per cent of China's IT spending in 2005, software-related jobs account for 21 per cent of IT employment.

"Because software needs to be serviced and distributed, it drives more employment than its share of IT spending would indicate," said the report.

BSA President and Chief Executive Officer Robert Holleyman said the association, whose members include software giants such as Microsoft and SAP, is seeking broader partnerships with the Chinese Government and industry associations.

"We look forward to these important joint efforts that will accelerate the expansion of the software and IT services industry, which, in turn, will make an even greater contribution to China's economy," he said.

IDC projected that China will have the sixth-largest five-year compound annual growth rate (CAGR) in IT investment from 2005 to 2009 among the 55 countries tracked by IDC.

The only countries that will see IT spending grow faster than China are Russia, India, Turkey, Indonesia and Viet Nam.

"But it should be noted that in 2005, the combined IT spending of these countries was less than that of China," said the IDC report.

"In addition, China is the only one of these countries that is expected to increase the rate of IT spending in the next five years."

(China Daily 04/06/2006 page9)

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