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Despite a hiccup caused by the severe acute respiratory syndrome in the first half of the year, China's information industry development will continue to stay on track, said a leading Chinese industry consulting firm.

The country's information sector will expand at an annual rate of 17.4 percent by 2007 to hit sales of 523.4 billion yuan (US$63.06 billion), said CCID Consulting Co Ltd.

By that time, China will have a mobile user population of 500 million, while 100 million Chinese will surf the Internet with broadband connections. More than 20 million desktops will be sold here and the domestic laptop sales will hit 4 million annually. All these figures will more than double the current level in China.

"These growth figures of the Chinese market are unmatchable in the world, as presently it is very rare to see double-digit growth in IT markets of other major countries," said Deng Zhicheng, vice president of the Hong Kong-listed consulting firm. "Operators in Western countries are suffering a decline in their revenue, while Chinese carriers still have enough room for expansion."

The best prospect offered by the Chinese IT industry is in the information service sector, said Huang Yong, executive director of CCID Consulting.

"In the first half of this year, this sector generated 7 billion yuan in revenue, and it will keep a 24.1 percent annual growth to hit more than 100 billion yuan in 2007," he said. "If any investors ask us which areas they should pay attention to, definitely this is our suggestion."

The most powerful driving factor behind it is the explosive growth of broadband deployment in China. In the middle of this year, 7.14 million Internet users on the Chinese mainland subscribed to high-speed Internet access service, almost three times the figure of a year ago.

One surprise in the CCID report is the firm's pessimism of China's mobile phone market, saying the sales of handsets will remain flat, with only 0.4 percent annual growth rate in the following five years.

In the first six months, 28.9 million handsets were sold in China, 0.7 percent fewer than a year ago. The value of handsets sold also dropped 2.1 percent to 48.68 billion yuan.

This year might also be remembered as a tough time for local information technology firms, especially for computer makers. As SARS affected individual and corporate purchasing, the sales of personal computers swung from 100 percent year-on-year growth in the first quarter to a 10 percent slide in the second quarter.

The sales of database, corporation management systems and information security programs also suffered decline.

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