'IT SPENDING IN CHINA WILL REACH $216.7BN'

Spending on information technology by consumers and enterprises in China is expected to reach $216.7bn in 2010, offering substantial opportunities for technology and service providers, according to a report by Gartner Incorporated.

This represents a 5.9 per cent growth from $205bn in 2009.

Despite the recent global economic downturn, the Chinese economy grew 8.7 per cent in 2009, with IT spending growing at 7.5 per cent year-on-year, the report said.

China government responded to the downturn by injecting $583.9bn in stimulus measures during the latter part of 2008, specifically addressing infrastructure and public facilities and organisations.

Gartner estimated that $40bn of this stimulus funding would impact the Chinese IT industry from 2009 to 2013, with the highest level of spending in 2010 as most stimulus policy measures and plans were finalised and executed during 2009.

IT spending represented 6.1 per cent of Gross Domestic Product in 2009. As the IT market evolves and matures, this ratio will decrease slightly to 5.5 per cent during 2013.

'The Chinese government's focus on driving high levels of GDP growth will create favourable market conditions for the continued evolution of the IT industry in China,' Principal Research Analyst at Gartner, Mr. Uko Tian, said.

He added that it had placed the development of the IT industry high on its list of priorities and stressed the wide applicability of IT in economic and social fields. The fixed-capital investment required is easier to obtain than other forms of financing.

The biggest area for IT spending in 2010 is expected to be telecommunications ($158.2bn), followed by computing hardware ($43 bn), IT services ($9.4 bn) and software ($6.2 bn). While they represent a smaller proportion of IT spending, IT services and software are expected to attain a faster growth rate than the hardware and telecommunications sectors during the next three years.

According to Gartner, the IT economy in China is driven by large verticals, rather than by consumer IT spending; however, it is slowly evolving toward the consumer market.