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China's Internet game makers are expected to make US$250 million this year, earning respectability for an industry once "despised and scorned," the Xinhua News Agency said Monday.

The companies are riding the surging popularity of online games among an estimated 40 million of China's 78 million Internet users. Its games produce another US$1.4 billion in business for telecoms and other industries.

Online games are now part of China's national science and technology program and the government offers makers tax breaks and other support, the report said.

"China's online game industry, which had been despised and scorned as a regular industry, now has achieved the support of the Chinese government," Lei Jun, president of Beijing-based software company Kingsoft, was quoted as saying.

The industry's revenues are up from just US$38 million in 2001, Xinhua said.

Online gaming is especially popular in. Internet cafes are often filled until the early hours with gamers competing against each other on linked computers or against scores of other competitors online.

The industry's growth parallels China's surging Internet use, despite bans on online gambling and pornography.

China has about 500,000 Web sites and 30 million computers hooked to the Internet, according to the Internet Society of China. Yet Chinese game makers' profits are limited because about 80 percent of games were developed by foreign companies, especially those from South Korea, Xinhua said.

It said local companies hope to close the gap with new products and training programs for gaming professionals in Beijing and elsewhere, it said.

The country's first department of game software has been established at Sichuan University in the southwestern city of Chengdu, integrating programs in literature, arts, English and software development.

Among Chinese success stories, Shanda Networking has attracted 300,000 users for its "The World of Legend" since the game was released in July.

Kingsoft plans to challenge South Korean giants with "JXOnline," a game that combines "Chinese martial arts and modern love," Xinhua said. After three years of development at a cost of US$1.8 million, the company plans to begin offering the game online this month.

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