China expects 15 pct of GDP from online economy

LONDON (Reuters) - China, home to the world's biggest internet population, will see its online economy double as a percentage of GDP in three to four years, as e-commerce develops, an official told Reuters on Thursday.

Cai Mingzhao, the vice minister of the State Council Information Office (SCIO), which oversees the internet, expects the country's online users to reach 300 million by the end of this year from a current 230 million.

"The Internet sector accounts for about 7 percent of China's GDP. As the internet penetration rate increases and e-commerce becomes more popular, that share should more than double to 15 percent," said Cai.

China had a roughly 17.7 percent internet penetration rate as of February, compared with a global average of 19 percent and 70 percent in the U.S. That is expected to grow to 23 percent by the end of this year.

China's 600 million mobile users will further boost internet usage when its telecom carriers launch third-generation mobile phone services later this year.

Cai expects the online industry to boom as payment systems and credit systems are established. He said Internet groups were currently focusing on expanding their user base, but would in time look to adopt paid-for models for premium content such as downloading videos.

(Reporting by Daisy Ku and Kate Holton; editing by Rory Channing)