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With our colleagues in the Mosaic group, we have done several studies of the state of the Internet in India and in China beginning in 1998. These studies were conducted using a six-dimension framework we have developed for characterizing the state of the Internet in a nation. In 1999, we published a comparison of the state of the Internet in China and India. At that time we found that China had a clear lead in each of our six dimensions. This paper updates the comparison. We compare China and India on our six dimensions and find that China continues to have a substantial lead. We also see that India has made significant strides since our 1999 comparison. After examining the six dimensions, we turn to determinants of the values of those dimensions. What has led to China's lead and the progress that both nations have made recently? We conclude that the following factors were important in shaping China's lead over India. (1)A lthough Indian universities undertook Internet experiments before those of China, China decided to make the Internet a priority and began building it in earnest before India. (2) Chinese economic reforms, which began in the late 1980s, provided both capital for and openness to the Internet. (3) The pre-Internet Chinese decision to invest in telecommunication infrastructure and information technology industries provided complementary infrastructure and human resources for the Internet. (4) The Chinese ability to execute by decree rather than consensus building followed by legislative and regulatory reform accelerated the diffusion of the Internet. (5) The Chinese were able to create competition among government-owned organizations without taking time for legislative change and the raising of private capital. (6) The Chinese were able to establish competitors to the incumbent telephone company relatively rapidly. Although these factors jump-started the Chinese Internet, and will continue to work in its favor, market forces and openness of access and content may serve India well in the long run. Furthermore, there are also great similarities between the two nations, and we hope they will learn from each other and lead other developing nations. (c) 2003 Massachusetts Institute of Technology Information Technologies and International Development.
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Press, Foster, Wolcott, McHenryThe Internet in India and China
41
© 2003 The Massachusetts Institute of Technology
Information Technologies and International Development
Volume 1, Number 1, Fall 2003, 41–60
a.
lpress@csudh.edu
Information Systems
California State University
Dominguez Hills, CA, USA
b.
wwfoster@asu.edu
Management Information
Systems
Arizona State University
Tempe, AZ, USA
c.
pwolcott@mail.unomaha.edu
Management Information
Systems
University of Nebraska
Omaha, NE, USA
d.
wm@uakron.edu
Management Information
Systems
University of Akron
Akron, OH, USA
The Internet in India and China
Larry Press,aWilliam Foster,b
Peter Wolcott,cWilliam McHenryd
With our colleagues in the Mosaic group, we have done several studies of the
state of the Internet in India and in China beginning in 1998. These studies
were conducted using a six-dimension framework we have developed for
characterizing the state of the Internet in a nation. In 1999, we published a
comparison of the state of the Internet in China and India. At that time we
found that China had a clear lead in each of our six dimensions. This paper
updates the comparison. We compare China and India on our six dimensions
and ªnd that China continues to have a substantial lead. We also see that
India has made signiªcant strides since our 1999 comparison. After examining
the six dimensions, we turn to determinants of the values of those
dimensions. What has led to China’s lead and the progress that both nations
have made recently? We conclude that the following factors were important
in shaping China’s lead over India. (1) Although Indian universities undertook
Internet experiments before those of China, China decided to make the
Internet a priority and began building it in earnest before India. (2) Chinese
economic reforms, which began in the late 1980s, provided both capital for
and openness to the Internet. (3) The pre-Internet Chinese decision to invest in
telecommunication infrastructure and information technology industries
provided complementary infrastructure and human resources for the Internet.
(4) The Chinese ability to execute by decree rather than consensus building
followed by legislative and regulatory reform accelerated the diffusion of the
Internet. (5) The Chinese were able to create competition among government-
owned organizations without taking time for legislative change and the raising
of private capital. (6) The Chinese were able to establish competitors to the
incumbent telephone company relatively rapidly. Although these factors jump-
started the Chinese Internet, and will continue to work in its favor, market
forces and openness of access and content may serve India well in the long
run. Furthermore, there are also great similarities between the two nations,
and we hope they will learn from each other and lead other developing
nations.
The world cannot ignore India and China—with almost 40% of the
world’s population, with growing middle classes (larger than most nations)
that are important consumers in the global market as well as increasingly
important global producers, and with aspirations to super-power status,
these two nations are forces to be reckoned with. This is as true in in-
formation and communications technology (ICT) as it is in strategic or
demographic terms. Although these two contiguous countries have very
different political and economic systems, both have assigned high priority
to information technology (IT) and the Internet. It is likely that these new
technologies will come to play a pivotal role in their
internal developments and their relations with the
rest of the world. But the role each assigns to ICT
development within their borders is distinctive.
These differences can be considered as a huge cross-
national natural experiment, shedding light on
Internet diffusion and development in general, and
the relative strengths and weaknesses of each na-
tion’s approach.
In this article we extend some of our earlier com-
parative work on China, India, and other nations in
several ways. (This article is a revised and extended
version of our more limited essay in First Monday, an
electronic journal.) First, we revisited both nations
(Wolcott and Goodman 2002; Foster and Goodman
2000),1and updated our earlier 1999 empirical ma-
terial. Second, we extend our earlier MOSAIC analy-
ses by devoting greater attention in this article to
the underlying drivers of national differences be-
tween the two countries. We point to fundamental
macroeconomic conditions such as rates of capital
investment and trade patterns that differ between
the two countries and that help explain their differ-
ent ICT performances. We also analyze more sector-
speciªc conditions such as China’s accelerated rate
of infrastructure build-out and India’s dynamic and
successful software export promotion program.
This article also points to some institutional and
political implications of the two nations’ contrasting
ICT strategies. For example, our ªndings run against
some of the conventional wisdom that assumes de-
mocracy will contribute more to the spread of the
Internet than autocracy. In the cases at hand, we
ªnd that the less democratic country has had
greater success in Internet diffusion than the more
democratic country, outcomes that have to do with
the relative ease or difªculty of trying to implement
reforms under Indian democracy, in contrast to the
Chinese authority’s ability simply to command.
Finally, we conclude by pointing to the trajectory
that each country’s Internet has taken to reach its
current performance status. In brief, India began
with a headstart in the late 1980s but was over-
taken by China in the 1990s. Today, the gap contin-
ues to grow in some areas but in others the Indians
have started to improve their performance relative
to the Chinese.
Our approach employs a comprehensive, six-
dimension framework we developed for characteriz-
ing the state of the Internet in a nation (Wolcott
et al. 2001). There is a now a robust repertoire of
models that analysts can employ to compare and
contrast the ICT conditions of countries around the
world, each with its own strengths and weaknesses.
These approaches, including our own, have been re-
viewed and categorized in several works, including
bridges.org and by Dutta and Jain (2003) in the
Global Information Technology Report 2002–2003.
We believe our approach, which we term MOSAIC,
has the advantage of analytic depth and has been
consistently and widely applied in more than 30 na-
tional case studies and three surveys.2We believe
that it captures the core performance dimensions of
Internet diffusion and the most critical causal deter-
minants of performance. It consists of six dimen-
sions, along which we assign one of ªve ordinal
values ranging from 0 (nonexistent) to 4 (highly de-
veloped), summarized in Table 1. Note that several
of the dimensions have explicit subcomponents.
Table 2 summarizes our ªndings when we ªrst
compared India and China in 1999. India joined the
Internet in 1988, six years before China.3Knowing
only that, we might expect India to have attained a
commanding lead in 1999, but instead China led
on nearly all of our dimensions, and India led on
none.
We attributed China’s relative success at that
time to several factors. Overall Chinese economic
performance was considerably stronger than India’s,
and the Chinese had decided to modernize aggres-
sively their telecommunication infrastructure and to
focus on IT long before the Internet became a con-
sideration. China became aware of the Internet in
the mid-1990s, and after taking a time to weigh the
economic beneªt of a controlled Internet against its
42 Information Technologies and International Development
The Internet in India and China
1. For our recent studies of India and China, see Wolcott and Goodman (2002). Many assertions and conclusions in
this paper are supported in these reports, and we do not explicitly reference them beyond this point.
2. For case studies, see mosaic.unomaha.edu/gdi.html, and for surveys and background, see som.csudh.edu/cis/lpress/
gdiff/index.htm.
3. For dates of the ªrst Internet Protocol (IP) connectivity of these and other nations, see www.nsrc.org/oclb/
msg00048.html.
political and cultural risks, China decided to move
forward.4
After our introduction in section 2, we compare
the current state of the Indian and Chinese Internets
on our six dimensions. In section 3 we examine the
determinants of the levels of those dimensions in
the two nations. In the conclusion we summarize
the key factors that have led to different diffusion
patterns between India and China and note the sim-
ilarity in the challenge that awaits both nations.
This section compares India and China along our six
dimensions and their constituent subdimensions.
(Impatient readers may want to jump to Table 12,
which summarizes the comparisons for 1999 and
today.)
Table 3 shows estimates of the numbers of Internet
users in India and China. The variation in the esti-
mates reºects different methods and timing, but all
agree that, as in 1999, China has a signiªcant lead
over India. Using the Netsizer estimates, user rates
are roughly 1.6% of the Indian population versus
3.7% in China.
Table 4 shows estimates from three sources of
the numbers of hosts in China and India or regis-
tered in the .in and .cn domains. Each organization
uses different estimation techniques, and all ªnd
China in the lead.
Volume 1, Number 1, Fall 2003 43
Press, Foster, Wolcott, McHenry
Table 1. Dimensions of Internet Diffusion
Dimension Description
Pervasiveness Our primary indicator of pervasiveness is the number of Internet users per capita. Al-
though this indicator is difªcult to deªne and pin down, we are satisªed to classify na-
tions using a rough, order-of-magnitude estimate.
Geographic
Dispersion
Nearly all nations have some Internet connectivity today, but access may only be avail-
able in large cities. As such, we selected geographic dispersion as our second dimen-
sion. This variable measures the concentration of the Internet within a nation, from
none or a single city to nationwide availability with points of presence (POPs) or toll-
free access in all ªrst-tier political subdivisions and common rural access.
Organizational
Infrastructure
Organizational infrastructure is a measure based on the state of the Internet service
provider (ISP) industry and market conditions. A highly rated nation would have many
ISPs and a high degree of openness and competition in both the ISP and telecommuni-
cation industries. It would also have collaborative organizations and arrangements such
as public exchanges, ISP industry associations, and emergency response teams.
Connectivity
Infrastructure
Connectivity infrastructure is based on domestic and international backbone band-
width, exchange points, and last-mile access methods. A highly rated nation will have
high-speed domestic and international backbone connectivity, public and bilateral ex-
change points, and a high proportion of homes with broadband connections.
Sectoral
Absorption
Although widespread access is desirable, the payoff is in use of the Internet. This is ac-
counted for in sectoral absorption, a measure of the degree of Internet use in the edu-
cation, business, health care, and public sectors. These sectors are seen as key to
development and were suggested by the measures used in the United Nations Develop-
ment Programme (UNDP) Human Development Index.
Sophistication
of Use
Sophistication of use is a measure ranking usage from conventional to highly sophisti-
cated and driving innovation. A relatively conventional nation would be using the
Internet as a straightforward substitute for other communication media such as tele-
phone and fax, whereas in a more advanced nation, applications may result in
signiªcant changes in existing processes and practices and may even drive the inven-
tion of new technology.
4. We have observed a similar staging in Cuba, which began with the rapid expansion of academic networks (by the
standards of the region), followed by a ºat period of assessment of the risks and beneªts. As in China, the Cuban gov-
ernment decided to proceed with a controlled Internet. For a discussion of this “dictator’s dilemma,” see Press (1998).
ChinaNET, China’s dominant Internet service pro-
vider (ISP), had established access nodes in all of the
provincial capitals by early 1996. During 1997 and
1998, the provincial Post and Telecommunications
Administrations extended the Internet to more than
200 cities.
At the time of our 1999 comparison, China had
a clear lead as India had points of presence (POPs)
in only 70 cities in 17 (of 32) states and union
44 Information Technologies and International Development
The Internet in India and China
Table 2. Summary of 1999 Comparison
Dimension Summary
Pervasiveness The Internet is more pervasive in China where there are an estimated 1.2 million ac-
counts versus only approximately 200,000 in India, and host count estimates give
China a lead of roughly eight to one. The research and university networks have been
particularly effective in China, where they account for more than half a million users.
Geographic
Dispersion
Commercial Internet access is available in more than 200 cities representing all Chinese
provinces, whereas India has Internet points of presence (POPs) in only 17 of 32 states
and union territories. China qualiªes for a higher rating on our scale, but usage is con-
centrated in large cities in both nations, and villages (roughly 70% of both popula-
tions) are completely unserved.
Organizational
Infrastructure
Organizational infrastructure is concerned with competition in the telecommunication
and Internet industries and with coordination and organization in the Internet industry.
Telecommunication is monopolized in both nations. Ironically, there has been more
Internet competition in China where there are four interconnecting networks. Two of
these serve only education and research, but the other two are open, and there are
200 competing access networks downstream from these. Until recently, the Indian gov-
ernment monopolized the Internet, but backbone and access competition have now
been authorized. Although interconnecting network competition is beginning in India,
the ministries that operate China’s commercial interconnecting networks, the Ministry
of Electronic Industries (MEI) and the Ministry of Post and Telecommunications (MPT),
are being merged into a new Ministry of Information Industries (MII), which may reduce
backbone competition.
Connectivity
Infrastructure
Connectivity infrastructure is a function of domestic backbone, the prevalence of high-
speed access, Internet exchanges, and international bandwidth. India has little terres-
trial backbone, relying almost exclusively on satellite links. China uses both satellite and
terrestrial links. For example, ChinaNET connects its centers with 155 mbps circuits and
connects to its 200 POPs at between 2 mbps and 34 mbps. Nothing close to this exists
in India. Neither nation operates Internet exchange points at present, but China has
plans to do so. China has more organizations connecting with leased lines, and is ex-
perimenting with cable modem and xDSL (digital subscriber line), but they are not de-
ployed in either nation. Finally, China has more than double India’s international
bandwidth. In spite of China’s relative advantage, we must bear in mind that aggregate
bandwidth per user is very low compared with that of a developed nation, rendering
interactive applications such as Web access impractical in many cases; e-mail is the pri-
mary application in all developing nations.
Sectoral
Absorption
China leads in sectoral absorption as well. Business connectivity is rare (under 10%) in
China, but fewer than 400 businesses are connected in India. Although connectivity is
almost nonexistent in primary and secondary schools in both nations, more than 300
Chinese universities and 200 research institutes have direct connectivity. Government
connectivity and Web sites are rare in both nations as is usage in the health sector.
Sophistication
of Use
Sophistication of use is comparable in the two nations, with the Internet increasing
efªciency of conventional organizations and processes, such as in substituting for mail
and fax. Both nations may make similar innovations in the future because they are de-
mographically similar in many ways. For example, both have large rural populations and
will be motivated to innovate in the use of the Internet to address the needs of villages
and in inventing new applications, technology, and organizations to enable that ser-
vice. (The Indian government has ofªcially recognized this as a priority.)
territories. But, by 2002, India had POPs in 140 cities
in 22 states and union territories, and today there
are POPs in more than 450 cities representing 27 (of
35) states and union territories. China still has a lead
in geographic dispersion, but India is rapidly adding
POPs.
In spite of China’s lead in POPs and percentage
of connected provinces, coverage in both nations re-
mains concentrated in urban areas. For example,
31% of www Web sites in the .cn domain are in
Beijing or Shanghai, and 29.4% of users are in
Guangdong, Beijing, or Shanghai. The Internet (and
other infrastructure) is strongest in eastern China
and weakest in the west, and in both India and
China, rural villages have essentially no Internet con-
nectivity. This is a daunting challenge but also an
opportunity to make a signiªcant contribution to
global quality of life.
This dimension is concerned with the ISP industry
and market conditions. India and China both began
with state-controlled telecommunication monopolies
that were inefªcient and resisted new technology,
Videsh Sanchar Nigram Limited (VSNL) and China
Telecom.5In an effort to spur growth and efªciency,
China established Unicom as a competitor to China
Telecom in 1994, and in 1998 consolidated control
by creating the Ministry of Information Industries
(MII) to oversee telecommunications, multimedia,
broadcasting, satellites, and the Internet. MII en-
couraged competition through support of Unicom
and by dividing the basic telecom service industry
into four government-owned companies specializing
in different types of service in 1999, and dividing
China Telecom into northern and southern compa-
nies in February 2002 (“State Council Approves”
2001). According to Pan of the Information Gate-
keepers newsletter, this restructuring is complete,
and by the end of the year, the two networks will
be interconnected and optimized.
India has pursued competition in a different way.
The government established the prestigious National
Taskforce on IT and Software Development in May
1998 to formulate IT policy.6The task force released
a 108-step IT Action Plan in July 1998; an IT Action
Volume 1, Number 1, Fall 2003 45
Press, Foster, Wolcott, McHenry
Table 3. Number of Users (Millions)
Nation
ITU
December
2001
CNNIC
July 2002
CIA
December 2002
(estimate)
Netsizer,
August 2002
India 7.0 16.6 10.2
China 33.7 45.8 47.8 41.0
Note: China Network Information Center (CNNIC): www.cnnic.net.cn/develst/2002–7e/index.shtml. Inter-
national Telecommunication Union (ITU): World Telecommunication Development Report 2002, March
2002, www.itu.int/ITU-D/ict/publications/wtdr_02/index.html. Telecordia Netsizer: www.netsizer.com/daily/
TopCountry.html. Computer Industry Almanac (CIA): www.c-i-a.com/.
Table 4. Host Counts (Thousands)
Host
NW
January 2002
CNNIC
July 2002
Netsizer
July 2002
Chinese Hosts 161 194
.cn Domain Names 89 126 119
Indian Hosts 96
.in Domain Names 83 68
Note: NW: Network Wizards Internet Domain Survey, www.isc.org/ds/WWW-200201/index.html. Netsizer:
Telecordia Netsizer, www.netsizer.com/. China Network Information Center (CNNIC): www.cnnic.net.cn/
develst/2002-7e/index.shtml.
5. India’s Mahanagar Telephone Nigam Limited provided local telecommunications service in Delhi and Mumbai.
6. For the description of the Taskforce and its history and reports, see it-taskforce.nic.in/vsit-taskforce/.
Plan on the Development, Manufacture and Export
of IT Hardware in October 1998; and a Long Term
National IT Policy in April 1999. In October 2000,
the Department of IT issued a progress report on the
initial 108 steps (summarized in Table 5; Lakshmina-
rayanan 2003).
India sought telecommunication liberalization by
appointing an IT task force that has generated visi-
ble, publicly debated action plans; China did the
same by central control and state-owned competi-
tors. Although the incumbents remain powerful,
there is growing competition in both nations.
China has licensed eight interconnecting back-
bone networks, as shown in Table 6. This is up from
four at the time of our previous study, but China
Telecom still controls 73% of international band-
width, indicating that they remain the dominant
ISP.7
Table 7 presents another indication of China
Telecom control. Bilateral agreements between
China Telecom and the other interconnecting net-
works account for more than half of the committed
backbone link capacity.
India’s Department of Telecommunication has is-
sued Class A (all India) ISP licenses to 68 organiza-
tions, and 44 of these had started service as of July
2002.8Five infrastructure providers have been li-
censed to sell end-to-end bandwidth and 49 others
have been licensed to provide infrastructure such as
dark ªber, right-of-way, and tower and duct space.9
Although the Indian backbone market is open, there
is also a state-ªnanced national Internet backbone
(NIB). In both nations, the backbone service market
is an oligopoly with dominant incumbents; there-
fore, we rate them even.
In addition to Class A licenses, India has granted
336 licenses for access in limited regions or local ar-
eas, but only about 90 ªnancially pressed ISPs are in
operation (Mahanta 2001). In spite of India’s gains,
China still seems to have a more competitive local
access market with more than 500 ISPs by the end
of 1999. These behave like free-market organiza-
tions, with many going out of business and atten-
dant layoffs.
46 Information Technologies and International Development
The Internet in India and China
7. A ninth network (Great Wall) belongs to the People’s Liberation Army, which is in a class by itself and is different
from the other interconnecting networks.
8. www.dotindia.com/isp/ispindex.htm.
9. www.dotindia.com/ip/ipindex.htm.
Table 6. Interconnecting Networks,
March 2002
Network Category
China Telecom
(ChinaNET)
Incumbent 5,507
China Netcom Commercial 920
China Unicom
(Uninet)
Commercial 443
CERNET Academic 257.5
China Mobile Commercial 200
Jitong (ChinaGBN) Commercial 168
CSTNET Academic 55
CIETNET Commercial 2
Total 7,552.5
Source: CNNIC: www.cnnic.net.cn/mapinfo/
english/cnnic-english.html.
Table 7. Chinese Contracted Link
Capacity, March 31, 2002
Mbps Percentage
Bilateral Agreements
with China Telecom
20,435 53%
Bilateral Agreements
Among Others
1,155 3%
Beijing NAP 16,973 44%
Total 38,563 100%
Note: China Network Information Center:
www.cnnic.net.cn/mapinfo/english/cnnic-
english.html. NAP = Network Access Point.
Table 5. Implementation of India’s Initial
Information Technology Action Plan
Implementation Number
Implemented 56
Not Implemented 27
Ongoing 22
Not Accepted 3
Total 108
We did not explicitly report on international gate-
ways in 1999, but India has moved to diversify this
market, having granted 24 companies permission to
operate 55 international gateways in 17 cities. At
least 9 government and private organizations cur-
rently operate international gateways, and ISPs are
free to purchase capacity directly from undersea ca-
ble operators. Indians are also free to install satellite
(V-SAT) connections to the Internet. (V-SATs played a
major role in India in 1999 because there was little
international cable connectivity.) The situation is
more competitive than in China where interconnect-
ing networks are required to lease the Chinese leg
of their international lines from either China
Telecom or Unicom, who then lease international
circuits from multinational carriers.
In addition to providing for competition in
Internet service provision, India’s 1999 Telecommuni-
cation Policy opened competition in basic telephone,
mobile telephony, infrastructure provision,
intranational and international long distance, V-SAT,
paging, and so on.
Voice Over Internet Protocol (VOIP) is a critical
technology for developing nations with low
teledensity and income and large expatriate popula-
tions (Rao 2001), but until recently, VOIP was
banned in India to protect telephone revenue. By
contrast, China concluded that the beneªt of low-
cost telephony would offset revenue cuts and has
encouraged VOIP. At least four major networks—
China Telecom, China Netcom, China Unicom, and
China Mobile—offer VOIP (ITU 2002a). China
Netcom had roughly $60 million in VOIP revenue in
2002, representing about one third of its revenue.
(H. Pan, March 7, 2003, phone interview). VOIP rev-
enue has also been instrumental in funding compet-
itors to China Telecom, strengthening our
assessment of the Chinese lead in access-provider
competition; however, now that VOIP is legal in In-
dia, it is becoming a signiªcant source of ISP reve-
nue. It may be that China’s early lead will erode over
the next few years.
Industry organizations constitute the ªnal com-
ponent of organizational infrastructure. India and
China each have several Internet and e-commerce
organizations; therefore, we rate the two nations as
even on this component.
China’s aggregate international bandwidth was
roughly twice India’s (Table 8) in October 2001, the
latest time for which we have comparable data
(Packet Geography 2002). Although China enjoyed
a considerable lead, we must bear in mind that
these are both developing nations, and the Internet
experience is slower and less reliable than in a na-
tion such as the United States or Japan. The com-
bined international capacity of India and China was
only 11% of U.S.-Asia capacity and 3% of Europe-
U.S. capacity. Note also that these are capacity
ªgures, not trafªc, so it is difªcult to speak to their
adequacy. On a per user basis, Indian capacity ex-
ceeds that of China.
We can get a sense of the rapid rates of growth
of the Internet in both nations by noting that total
international bandwidth from India was only 82
mbps in January 1999, and that China had doubled
its international bandwidth to 7,466 mbps by March
2002.10 (It is also interesting to note that the per-
centage of Chinese link capacity to the United
States rose from 50% to 79% between October
2001 and March 2002.)
Turning to domestic backbones, India’s NIB has
not kept pace with its initial plans but has deployed
its ªrst phase, which provides ten 2.5 Gbps capacity
self-healing rings, connecting 33 large cities includ-
ing the major state capitals and links to POPs in
Volume 1, Number 1, Fall 2003 47
Press, Foster, Wolcott, McHenry
Table 8. International Link Capacity
Nation Mbps Nation Mbps
U.S. 1640 U.S. 1166
Hong Kong 654 Singapore 145
Japan 388 Italy 76
Taiwan 257.3 United Kingdom 60
Rep. of Korea 155 Hong Kong 22
Australia 151 Japan 16
Singapore 51 Germany 8
Others 1.5 Austria 8
UA Emirates 8
Switzerland 1.5
Total 3297.8 1510.5
10. CNNIC: www.cnnic.net.cn/mapinfo/english/cnnic-english.html.
more than 420 cities. This may be compared with
China Telecom’s 16 trunk lines (8 east-west and 8
north-south) with capacity of 2.5 Gbps each. Univer-
sity networks remain stronger in China, but the do-
mestic backbone gap is closing, particularly on a per
user basis.
A major Internet exchange point (IX) is now op-
erating in Beijing, and two others have been con-
structed in Hanghai and Guangzhou, but pricing
and management issues remain to be resolved.
There are also several local IXs, for example, in
Shanghai (Ji 2001/2002; H. Ji, July 24, 2002, per-
sonal interview). As shown in Table 9, the IX and
domestic bilateral exchange points have the capacity
to handle 84% of Chinese trafªc, indicating that
China has weaned itself from the U.S. and other
backbones.
VSNL has established an exchange point, and ex-
change points are part of the NIB plan. The Internet
Service Providers Association of India and the Band-
X bandwidth and collocation space brokerage have
announced plans for Indian IXs, but their implemen-
tation seems to be stalled, perhaps by the dot-com
bust. India’s Telecommunications Regulatory Author-
ity has also acknowledged the need for Internet ex-
change and has called for the establishment of a
national Internet exchange. In the meantime, Indian
ISPs must choose between a limited number of
closed exchanges and the cost and latency of inter-
national round-trips for domestic trafªc. At the pres-
ent time, China is leading in IX capacity and the
capacity to handle domestic trafªc domestically.
China has a clear lead in broadband11 access
with 3.5 million digital subscriber lines (DSLs)
(H. Pan, March 7, 2003, phone interview) and 3.15
million integrated services digital network (ISDN) us-
ers, as compared with only 73,000 broadband users
(72% of which are corporate) in India (“Broadband”
2002). Conºicts between the State Administration
for Radio, Film and Television and the MII have
slowed cable deployment, but a new organization
with authority over both has now emerged; there-
fore, the cable alternative is expected to pick up
steam. Another 16.6 million Chinese users connect
via a local area network (LAN) with a leased line.12
China Telecom has made “large investments in ªber
metropolitan area network (MAN) and high-speed
access networks” for ªber to residence, ªber to
building, and ªber to curb (Cisco 2001). Unicom
and China Netcom have also deployed ªber to
buildings in some urban areas. We do not know the
extent of this ªber or its use. (Metropolitan ªber ac-
cess has been slowed in the United States, with
companies such as Yipes and Metromedia Fiber Net-
works ªling for bankruptcy.)
Both nations have assigned high priority to commer-
cial Internet application. We found that 192,340
Chinese enterprises have registered in either the
.com or .com.cn domains, and 78.4% of .cn Web
sites are .com.13 China has some e-commerce in
support of trade, and India has a $10 billion soft-
ware industry, but commercial use is not widespread
in either nation (see the Sophistication of Use sub-
section).
Although both nations have committed them-
selves to connecting secondary schools to the
Internet, few are currently online. In both India and
China, the Internet began in the universities. Al-
though India’s Education and Research Network is
older, dating back to 1986, the Chinese Education
and Research network (CERnet), and Science and
Technology network (CSTnet) are stronger. CERnet
provides more than 10 million accounts (most for
students) at 900 Chinese campuses, and CSTnet
provides 800,000 accounts on 100 campuses. Both
operate backbone networks and conduct important
networking research (Wu 2002). The number of PCs
in all levels of schools is shown in Figure 1. Few or-
48 Information Technologies and International Development
The Internet in India and China
Table 9. Chinese Contracted Link
Capacity, March 31, 2002
Mbps Percentage
International Links 7,553 16%
Beijing IX 16,973 37%
Domestic Bilateral 21,590 47%
46,116 100%
Note: China Network Information Center:
www.cnnic.net.cn/mapinfo/english/cnnic-
english.html.
11. We consider broadband to be access from home by other-than-analog modem.
12. Note that there is some double counting because some users have more than one mode of access.
13. www.cnnic.net.cn/e-sl.shtml. Note that only one Web site is counted per domain name.
ganizations in the health sector have an Internet
presence as evidenced by always-on connectivity or
a signiªcant Web site; therefore, we rate China and
India as even in this area.
The governments of both nations have been slow
to use the Internet, but in 1999 both adopted poli-
cies that encourage and mandate the use of the
Internet by government agencies. Table 10 shows
the numbers of national government agency Web
sites analyzed by the Cyberspace Policy Research
Group (CyPRG). (Note that these totals are far below
the numbers of domain names registered to govern-
ment agencies in the two nations.)
CyPRG examines 23 characteristics indicating
Web site transparency and 22 characteristics indicat-
ing interactivity.14 As Table 11 shows, they ªnd In-
dian sites to be more transparent and interactive. In
addition to a greater willingness on the part of the
Indians to open government data and services, this
may reºect the relative age of
the Web sites, in that more
information has been added
over time and search, chat,
and other interactive features
have been programmed.
Some Indian state govern-
ments are also highly commit-
ted to the Internet. The state
of Karnataka has long offered
incentives that built Bangalore
into India’s “Silicon Valley.”
More recently, Chief Minister
Naidu of Andhra Pradesh has
made IT a key component of
his political and governance
strategies (Press et al. 1998).
Naidu has attracted IT investment to the region,
uses management information systems, and is at-
tempting Singapore-like e-government applications.
Gujarat also has an IT policy calling for infrastruc-
ture, training, and incentives to attract investment.15
This dimension focuses on the extent to which de-
ployed applications alter the lives and behavior of
individuals and organizations. E-mail, game playing,
chat, and such are all available in both nations and
are used for recreation and to substitute for tele-
phone and written communication.
Domestic e-commerce has not taken off dramati-
cally in either nation because of constraints in the
delivery, payment, and legal systems, and network
shortcomings. E-mail and passive Web pages are the
norm for businesses that use the Internet. Our sur-
vey of publicly traded Indian companies found that
less than 10% of those with working Web sites16
Volume 1, Number 1, Fall 2003 49
Press, Foster, Wolcott, McHenry
Figure 1. Personal computers installed in education.
Table 10. National Government Agency
Web Sites
Nation 1997 1998 1999 2000
China 1 8 34 39
India 12 76 107 110
Note: Cyberspace Policy Research Group:
www.cyprg.arizona.edu.
14. Transparency is a measure of the amount of data an agency makes available through its Web site, and interactivity
indicates how easy it is for visitors to use the information on the Web site, give feedback to the agency, contact
agency ofªcials, and so on.
15. www.gujaratindia.com/it/itp1.html.
16. It is indicative of the situation that 29% had invalid or nonexistent uniform resource locators (URLs).
Table 11. Cyberspace Policy Research
Group’s Average of Total Scores
Nation Transparency Interactivity
China 2.4 1.0
India 5.6 1.7
do e-commerce. Thatcher’s (2002) study of interna-
tional business-to-business e-commerce in China
ªnds:
There is relative agreement that active use of
websites, ERP systems, CRM systems, and SCM
systems all constitute B2B e-commerce tools but
companies are much more likely to use e-mail and
passive websites as tools for conducting business.
. . . The newness of electronic B2B tools in the
PRC and the more recent availability of reliable
wide area data networks may explain the low rate
of adoption there.
Because China has encouraged VOIP whereas
VSNL successfully fought it until April 2002, Internet
telephony has had a greater impact in China—both
in providing service to the public and in funding
China Telecom competition.
CERNet has an active Internet Protocol version 6
(IPv6) research program, and China is deploying IPv6
with an eye toward the expanded address space
needed for large numbers of users and portable de-
vices and the quality of service requirements for au-
dio and video.
Table 12 shows that India did not lead China on any
dimension or subcomponent in 1999. Although
China retains a clear lead over India, India has
closed the gap in a few places. This section looks at
50 Information Technologies and International Development
The Internet in India and China
Table 12. Dimension Comparison Summary
Dimension or Component
ge
Even)
China,
IIndia, E Even)
Pervasiveness
Users C C
Hosts C C
Geographic Dispersion
Top-Tier Political Divisions with
POPs
CC
Number of Cities with POPs C C
Sectoral Absorption
Commercial E E
Education C C
Government E I
Health E E
Connectivity Infrastructure
Domestic Backbone C E
Broadband Access E C
Exchanges E C
International Bandwidth C C
Organizational Infrastructure
Telecommunication Competition E I
International Gateway Competition I
Backbone Competition C E
Access Provider Competition C C
Coordinating Organizations E E
Sophistication of Use EE
some of the key determinants—factors underlying
the levels of Internet diffusion. Again, we consider
our six dimensions.
Minges and Gray (2002) cite seven determinants of
Internet pervasiveness: affordability, complementary
infrastructure (PCs, telephone lines, and electricity),
literacy, education, awareness, computer literacy,
and language. Let us look at each of these.
Affordability is a function of income and the cost
of Internet access. Although both nations are largely
impoverished, Chinese income is higher. In the late
1980s, China exchanged Karl Marx’s slogan, “From
each according to his ability, to each according to
his needs,” for Deng Xiaoping’s “Getting rich is glo-
rious.” The resulting increase in purchasing-power
parity gross domestic product (GDP) per capita is
shown in Figure 2. After decades of approximate
parity, China began pulling away from India in
1990, and today Chinese GDP per capita is $3,976
versus $2,358 for India.17 (Unfortunately, Chinese air
and water pollution have also surged, bringing them
to second place behind the United States. This may
be a limiting factor.)
China’s greater income combines with lower ac-
cess costs and lower costs of computers to make
the Internet more affordable. Table 13 shows dial-up
tariffs.
Part of China’s relative advantage in access cost
reºects dramatic improvement in telecommunication
since it decided to invest in
this area in 1990.18 This deci-
sion predates Chinese aware-
ness of the Internet, but it has
certainly facilitated its growth.
Chinese telecommunication
progress is illustrated by the
rapid growth in the number
of landline telephones (Table
14). In 1990, India and China
had the same teledensity: 0.6
main lines per 100. By 2000,
China had leaped ahead. In
one year, 2000, China in-
stalled 35 million new ªxed
lines—more than in the entire
developed world in 1999 and 2000 combined.
China has also surpassed the United States as the
world’s largest mobile market with 145 million sub-
scribers (ITU 2002a). This growth parallels growth in
the general economy; the Chinese made the deci-
sion to invest in telecommunication, and they were
able to afford it.
China also has a commanding lead in PCs. The
ITU estimates approximately 25 million PCs in China
versus 6 million in India, and the Computer Industry
Almanac estimates 34 million versus 5.2 million (ITU
Volume 1, Number 1, Fall 2003 51
Press, Foster, Wolcott, McHenry
17. China’s sustained growth since 1990 has lifted 150 million people out of poverty (World Bank 2002).
18. China’s early focus on informatization was due in part to the inºuence of U.S. futurist Alvin Tofºer.
Figure 2. Purchasing-power parity gross domestic product per capita.
Table 14. Teledensity, 1990–2000
Nation 1990 2000 1990 2000
China 0.6 17.8 159 95
India 0.6 3.6 160 145
Table 13. Dial-up Tariffs, US$, 30 Hours
Use per Month, 2001
Nation
Monthly
PSTN
Subscription
PSTN
Usage
Charge
ISP
Charge Total
India 5.6 0.2 10 15.75
China 3 0.1 6.5 9.69
Note: PSTN Public Switched Telephone Net-
work; ISP Internet service provider.
2002a). Using either estimate, the gap is growing
rapidly (it was 3.7 million versus 1.1 million in 1996)
because of greater affordability in China and a do-
mestic PC manufacturing industry that produced 7.5
million PCs and 6 million personal digital assistants
(PDAs) in 2001 (Mainland China 2002). Lower PC
cost makes Internet access even more affordable in
China than in India.
Electricity to power PCs and network equipment
is also more abundant in China. (This can be a limit-
ing factor in a rural area.) China’s electricity con-
sumption is 746 kwh per capita versus 384 kwh in
India (ITU 2002a).
China also leads in education and literacy indica-
tors (Table 15). Text is the dominant data type on
today’s Internet (especially in a low-bandwidth de-
veloping nation); therefore, literacy is very
important.
Awareness of the Internet is difªcult to compare.
One would expect it to correlate with usage, but In-
dian city dwellers see constant ads and information
about the Internet. We assume that computer liter-
acy would correlate with installed PCs because
Internet access in public schools is not widespread.
Language is a multifaceted determinant. India
has an advantage in that the educated people who
are most likely to use the Internet speak at least
some English, the dominant language on the
Internet at this time.19 This advantage is offset by
greater language diversity in India. India has 387 liv-
ing languages and China has 201. Their respective
language diversity indexes are 0.48 and 0.93, re-
spectively. (The higher the value, the less likely it is
that two people will speak the same language.) This
is due in part to the fact that 70% of the Chinese
population speaks Mandarin whereas only 50%
speak Hindi in India.20 China is well aware of the
importance of English and has embarked on a pro-
gram of English-language training.
China’s advantage over India in the indicators we
have presented leads us to expect that the Chinese
will continue to lead in pervasiveness for some time.
Factors such as economic productivity, telecommuni-
cation infrastructure, PC production, and literacy
cannot be changed rapidly.
Large rural populations are the major block to geo-
graphic dispersion in both nations. Both have made
commitments to provide telephone connectivity to
all villages, but widespread rural Internet connectiv-
ity will be difªcult for either to achieve. Every factor
we discussed under the Pervasiveness subsection
presents a larger problem in rural areas than in cit-
ies. There is also signiªcant variation in Internet dif-
fusion among regions and states in both nations.
For example, Table 16 shows the percentages of
China’s 742,000 villages that have telephone service
(H. Yufu, personal communication based on
rmyd.cnii.com.cn/20020201/ca16330.htm). As
shown in Table 16, eastern China is better served
than the west. (Such regional differences are gener-
ally more pronounced in developing nations than in
industrial nations.)
Note that even in villages with telephone connec-
tivity, service may be minimal. For example, in a
1998 survey of 11 villages in Pondicherry, India, the
M. S. Swaminathan Research Foundation ªnds
4,373 households with 21,465 people sharing 12
public and 27 private phones (Press 1999).
52 Information Technologies and International Development
The Internet in India and China
19. Global Reach estimates that 40.2% of Internet content is English and 9.8% is Chinese (www.glreach.com/
globstats/index.php3). Note that China has embarked on a program to teach English to technical workers.
20. Language data is from Ethnologue (www.ethnologue.com/). Cantonese (Yue) uses the same character set, and
many people in other nations including Indonesia, Malaysia, Singapore, Taiwan, the United States, and Vietnam speak
both languages.
Table 15. Education Indicators
Nation
Adult
Literacy
Rate
Secondary
School
Enrollment
Rate
Mean Years
of Schooling
for Those 15
and Older
India 52% 39% 5.1
China 81.5% 50% 6.4
Table 16. Village Telephone Availability
Region
Percentage with
Telephones
Eastern China 95.4
Mid China 80
Western China 47
Overall 78
Ostensibly, each of these villages had telephone ser-
vice, but it was clearly insufªcient to support
Internet connectivity.
These are large, geographically diverse nations,21
and as in other developing nations, there is
insufªcient demand to justify investment in back-
bone connectivity to rural areas, particularly where
roads are bad. Government policy can help. As a li-
censing condition, regulators can require operators
to cover rural area or a universal service fee may be
set aside. The Chilean government asked telephone
providers to bid for subsidies required to cover rural
areas with success (Wellenius 1997).
Low-earth-orbiting IP satellite technology may
one day solve this problem, but rural connectivity is
a daunting challenge in both India and China. Al-
though the recent bankruptcy of Teledesic, an IP sat-
ellite company, is discouraging, this technology will
be more feasible in the future. The G8 industrial na-
tions pledged billions of dollars for IT for develop-
ment at their Okinawa summit in 2000. Could they
or an organization such as the United Nations ac-
cept the challenge of rural village connectivity and
provide capital for such a venture?
India appears to give higher priority to rural net-
working than China. The Ministry of Information
Technology has a Working Group on Information
Technology for Masses22 that issued a report in Oc-
tober 2000 recommending 56 actions in infrastruc-
ture and service, electronic governance, education,
and raising mass IT awareness. If they succeed, they
may surpass China in rural networking and hence
geographic dispersion.
The transition from government-owned telecommu-
nication monopoly to greater competition has been
driven by politics and government policy in both na-
tions. India and China present a stark contrast in
governance. The United Nations Development
Programme (UNDP) surveys ªve measures of democ-
racy in a nation, and India has a clear lead over
China on each of them (UNDP 2002). Few would
question that there is greater freedom of expression,
the press, the vote, and civil liberties in India. India’s
democracy has spawned many political parties,
strong local governments, a coalition national gov-
ernment, and lively public debate.
The complex political landscape of India has
made it more difªcult for it to formulate policy and
execute plans than it is for China. During the 1990s,
China’s industrial policy focused on infrastructure
and high technology (Pangestu 2002). Figure 3 illus-
trates this emphasis, and China has been able to ex-
ecute plans effectively by allocating resources to
competing government-owned enterprises.
For example, in 1996, the Chinese State Council
made the decision to allow the Internet and to con-
nect all provincial capitals. Within a year, there were
competing ISPs in every capi-
tal, one using ªber, the other
V-SAT. India set the same goal
in 1998 but has yet to achieve
it.
At the time of our earlier
comparison, China had just
consolidated telecommunica-
tion under the MII, and we
wondered what the effect of
that would be on competition
and growth. It has continued
the strategy of competition
among government-owned
enterprises, and thus far, it
has succeeded. We have ob-
served this pattern of
Volume 1, Number 1, Fall 2003 53
Press, Foster, Wolcott, McHenry
21. The area of China is nearly three times that of India.
22. itformasses.nic.in.
Figure 3. Total information and communication technology expenditures.
government planning combined with competition
among partially or wholly government-owned orga-
nizations in Singapore, Vietnam, and Cuba as well
as China (Press 1998, 2000; ITU 2002b). The ITU
also observes the efªcacy of this strategy in China:
The main form of competition has been between
ministries of the government . . . although it is
unlikely that this form of competition between
state-owned enterprises would feature in many
economics textbooks, it has proved remarkably ef-
fective. The key underlying factor is the will of the
state to invest in, and prioritize, telecommunica-
tion development (ITU 2002a).
The UNDP (2002) also reports six indicators of
the rule of law, governance effectiveness, and cor-
ruption, and China outscores India on each. This
also contributes to China’s ability to execute and to
bolster the conªdence of investors. The Indian gov-
ernment is working to overcome inefªciency and
corruption, as evidenced in part by strong support
for the IT Action Plan, and since our previous study,
it has made signiªcant competitive progress.
In addition to factors already discussed, a trade pol-
icy and other factors that encourage investment and
the availability of a skilled work force are also key
determinants of connectivity infrastructure.
India has a history of ambivalence about open-
ness and trade versus self-sufªciency dating back to
Gandhi; and before the 1990s, China was also insu-
lar and tied to the Communist block. Since the 1990s,
Chinese trade policy has been more open and eclec-
tic, resulting in signiªcantly faster growth in imports,
exports and the ability to attract foreign investment
than in India (Figure 4; China is shown with a dia-
mond symbol; India has the square symbol.) This
parallels the growth in GDP we noted earlier.
Some of this increase in trade and ability to at-
tract investment capital is due to pressure from the
World Trade Organization (WTO). Michalopoulos
(2002) ªnds that “China has [already] used the pro-
cess of WTO accession to stimulate and make irre-
versible substantial trade liberalization and more
broadly based reforms.”23 We expect this pressure
to continue.
At the same time, India will see increased trade
as it continues implementation of its IT Action Plans.
In addition to the volume of investment capital, we
must consider its allocation. In the long run, India’s
greater diversity and openness may pay off, and
China may ªnd it has allocated resources subopti-
mally, but, as recent events have shown, market
economies can do the same.
Connectivity infrastructure also requires educated
technicians and managers. China has a higher per-
centage of tertiary school students in science and
engineering (43% vs. 25% in India; World Bank
2002), but India has excellent technical universities
and a vibrant trade school industry. Chinese tele-
communication employees may also be more
efªcient—the number of main lines per employee is
159 in China and only 77 in India.
Networking professionals (and sophisticated us-
ers) are also generated by hardware and software
industries.
54 Information Technologies and International Development
The Internet in India and China
23. There has already been some privatization. China Mobile is part owner of several private mobile operators, and
Unicom is partially private with its shares traded on the Hong Kong Special Administrative Region of the People’s
Republic of China (SAR) stock exchange.
Figure 4. Imports, exports, and foreign direct investment in China and India, from 1990 to 2000.
US$ (billions)
Imports, 1990–2000 Foreign Direct Investment, 1990–2000
Exports, 1990–2000
India was an early mover in software export
(Press 1993), and the export of software and IT-
enabled services (which include low-skill work such
as data entry) was $8.26 billion in 2001. The total
software industry of $10.1 billion was about 2.2%
of Indian GDP.24 Although off to a later start, China
currently exports approximately $1 billion in soft-
ware, offers lower prices than India (some Indian
work is subcontracted to China), and has begun
English-language training for programmers and en-
gineers (Manu 2001).
China enjoys a clear lead in IT hardware manu-
facturing. Chinese companies produced $23.9 bil-
lion in computer products in 2001, an increase of
24% over 2000 (Mainland China 2002). Thirty nine
percent of Chinese exports are high- and medium-
tech products versus 16.6% in India, and as we
have seen, the absolute numbers are much greater
for China. It remains to be seen whether India’s Ac-
tion Plan for Hardware Development, Manufacture
and Export will enable it to close this gap.
Expatriate workers in Europe and the United
States are also playing a role in the growth of IT de-
velopment in both India and China. Saxenian sur-
veyed 2,273 ªrst-generation immigrants who are
members of Silicon Valley high-tech professional as-
sociations and ªnds:
Twenty-seven percent of those surveyed advise or
consult for companies in their country of origin,
and about 30 percent meet with government
ofªcials. An even greater share (40 percent) had
arranged business contracts in those countries.
Half the entrepreneurs identiªed in the survey had
set up subsidiaries, joint ventures, subcontracting,
or other business operations in their native coun-
tries and most of the other respondents would
consider doing so in the future. (Saxenian 2002)
Saxenian’s (2002) survey included 1,271 ªrst-
generation immigrants from China, Taiwan, and
India, and it ªnds many had either been involved in
founding or running a start-up company (Table 17).
Because the survey was of members of technical
professional societies, these results overstate the
overall participation rates of expatriates in business,
but as Saxenian points out, the “brain drain” looks
more like “brain circulation.”
India enjoys a signiªcant entrepreneurial lead in
this survey, but that may reºect the time and place
of the study, and the gap may close in the future.
Regardless, much of this activity will encourage
Internet use and investment in the two nations.
China’s close commercial relationship with Taiwan
and the Hong Kong handover provide similar
sources of capital and expertise for the People’s Re-
public of China. The Internet and telecommunica-
tion in Hong Kong and Taiwan are far more
advanced than in China. In spite of long British rule
and Taiwanese independence, there are strong cul-
tural and business ties throughout the Chinese
world. (Even before the handover, 46.75% of
China’s switched, outbound telephone minutes were
to Hong Kong and another 8.02% were to Taiwan.
Hong Kong ranks second to the United States in
Internet connectivity from China; Staples 1997.)
There are also ties to the Chinese in Singapore. For
example, Shanghai Venture Capital has allied itself
with Venture TDF Company in Singapore (Franda
Forthcoming).
University networks are growing in both nations, but
the Chinese are more effective and have gained a
signiªcant and strategic lead in the universities that
will trickle down to lower levels of school. Both na-
tions have plans to wire schools, but that does not
ensure their execution, and very few lower schools
are connected in either nation. The greater number
of PCs in schools (and concomitant awareness and
computer literacy) gives China an edge in this area,
but both nations have a long way to go if they are
to achieve their plans. Political will is probably the
deciding factor in achieving school connectivity.
We expect that increased trade will lead to in-
creased use of the Internet to integrate business
supply chains and software project management.
Volume 1, Number 1, Fall 2003 55
Press, Foster, Wolcott, McHenry
24. www.nasscom.org/articles/annual-result.asp.
Table 17. Percentage Founding or
Participating in a Start-up
Participation
Rate China Taiwan India
No Participa-
tion
68 49 40
Part-Time 17 17 17
Full-Time 16 34 49
The expatriate communities mentioned earlier may
play a key role here.
E-government requires priority and will on behalf
of politicians, and India has a recommendation for
26 electronic governance actions, which, if imple-
mented, will be signiªcant.25 We expect more vari-
ance in India, where state governments are relatively
independent.
We see little evidence of use of the Internet in
the health care sector in either India or China. This is
typical of developing nations.
China has seen the result of Soviet glasnost and
is attempting to control the Internet much more
than India. This has led to site ªltering and propos-
als to create a “walled garden” national intranet
with gateways to the Internet:
Since 1995, more than 60 laws have been en-
acted governing Internet activities in China. More
than 30,000 state security employees are currently
conducting surveillance of Web sites, chat rooms
and private e-mail messages—including those
sent from home computers. Thousands of Inter-
net cafes have been closed in recent months, and
those remaining have been forced to install
“Internet Police 110” software, which ªlters out
more than 500,000 banned sites with porno-
graphic or so-called subversive content. Dozens of
people have been arrested for their online activi-
ties; in 2001, eight people were arrested on sub-
version charges for publishing or distributing
information online. (Qiang and Beach 2002)
Although this sort of constraint may seem to
promise attractive stability to some potential inves-
tors, it may have the unintended side effect of slow-
ing applications in education, entertainment,
commerce, and other areas.
Nearly 40% of the world population lives in rural ar-
eas of nations with low-income economies (World
Bank 1997). In India the rural population is more
than 70% (World Bank 1997). China has 900 mil-
lion rural residents and has recently liberalized re-
strictions on movement from rural to urban areas
(“Residence” 2001). If necessity is the mother of in-
vention, these nations are in a good position to in-
novate in discovering and deploying applications
that are of value to rural populations. If the Internet
can improve rural education, health care, entertain-
ment, news, economy, and so on, the ºow of peo-
ple to crowded cities, a major demographic trend of
the last century, may be diminished.
We would welcome innovation in small PCs and
Internet appliances, satellite and terrestrial wireless
systems, solar energy systems, understanding rural
IT requirements, and so on.26 India has several pro-
jects pursuing village connectivity,27 but there has
not been widespread deployment. In anticipation of
a proliferation of Internet devices and multimedia
applications, China has been developing equipment
for and deploying IPv6. This experience and infra-
structure may lead to innovative applications, as
may China’s experience with VOIP.
At this time, China has a solid lead over India. How-
ever, China is no longer leading or equal on every
dimension, as it was earlier, and, when considered
on a per user basis, India is not as far behind as it
ªrst appears. Table 18 lists some of the determi-
nants of this lead, and we conclude with a discus-
sion of key factors.
Since Indian universities joined the Internet in
1988, 6 years before their Chinese counterparts, we
might expect India to have a commanding lead. But
the race did not really begin in 1988. The Internet
was very different then than it is today. Early univer-
sity networks were run by and run for a handful of
technicians. The race began in earnest in the mid-
1990s when policy makers, politicians, the IT indus-
try, and the middle-class public became aware of the
Internet. After a delay to weigh the economic op-
portunity afforded by the Internet against the cul-
56 Information Technologies and International Development
The Internet in India and China
25. www.mit.gov.in/itmasses/repg3.htm.
26. The Simputer (www.picopeta.com/) is an example of a low-cost Internet appliance being developed in India, and
Teledesic (www.teledesic.com/) may bring IP connectivity to rural villages at reasonable cost if it achieves its goal of be-
ing up by 2005.
27. Example projects are Drishtee, which hopes to install 50,000 kiosks serving 500 million people over the next
six years (www.drishtee.com/index.htm); Gyandoot, with rural kiosks for e-governance and other applications in
Madhya Pradesh (gyandoot.nic.in); and the M. S. Swaminathan Research Foundation Information Village Research
Project (www.mssrf.org/informationvillage/informationvillage.html), which has conducted in-depth studies of the infor-
mation needs of villagers in one area and is now attempting to serve them (see Press 1999).
tural and political risks of open access, the Chinese
made the Internet a priority. One can argue that In-
dia began working toward a modern Internet sev-
eral years after China with the IT Action Plan of July
1998.
Much of China’s Internet success is due to eco-
nomic reform that began in the late 1980s. Under
Deng Xiaoping, China instituted market reforms and
liberalized trade policy. During the 1990s, Chinese
GDP per capita moved from roughly equal that of
India to double, and the gap in imports, exports,
and foreign direct investment grew even more rap-
idly. Deng Xiaoping wrote that “getting rich is glori-
ous,” and the success of Chinese economic reforms
provided both the resources for and openness to
Internet development.
Volume 1, Number 1, Fall 2003 57
Press, Foster, Wolcott, McHenry
Table 18. Key Determinants
Determinant
Government Priority P, GD, SA, CI, OI, SU China began ªrst, but India is now committed. Some
Indian states are innovators.
Democracy and Transparency P, SU India has clear lead on UNDP indexes, but China acts
more decisively.
Rule of Law, Governance
Effectiveness, and Corruption
OI, CI China has edge on UNDP indexes.
Government Control over
Content and Access
P, GD, SA, SU China has much stronger restrictions on content and
access than India.
Trade Policy P, CI China is more open historically, has a large lead, and
is now a WTO member.
Telecommunication Policy P, OI, CI Different approaches to similar goals.
Economic Productivity P, GD, SA, CI, SU China leads.
Health P, SA China leads.
General Education P, GD China leads.
General Literacy P, GD China leads.
Technical, Managerial, Profes-
sional Education
P, CI, SA, SU India has strong universities and trade schools.
Expatriate Entrepreneurs and
Technicians
SA, CI, SU India leads in the United States, and China has Hong
Kong and strong ties to Taiwan and Singapore.
University Networking P, CI, SA, SU China leads.
Language P English advantage to India and diversity to China.
Software Industry P, SU India leads.
IT Hardware Industry P, CI, SU China has large lead.
Telecommunication
Infrastructure
P, GD, CI China leads.
PCs P, SA China leads in installed base and manufacturing.
Electricity P, GD China leads.
Geography P, GD Both have large populations in remote villages with
poor roads and transportation.
Rural Connectivity Policy P, GD India has a plan and several relevant research pro-
jects in this area.
VOIP P, CI VSNL was successful in stalling VOIP until recently,
whereas China has encouraged it.
IPv6 P, CI, SU China is investing here with an eye toward non-
computer access and multimedia.
Note: P pervasiveness; GD geographic dispersion; OI organizational infrastructure; CI connectivity
infrastructure; SAsectoral absorption; SU sophistication of use; UNDP United Nations Development
Programme; VOIP Voice Over Internet Protocol; VSNL Videsh Sanchar Nigram Limited.
At the same time, China focused its industrial
policy on infrastructure and high technology. This
led to dramatic expansion of telephone networks,
PC manufacturing and adoption, awareness of the
Internet and IT applications, and a pool of trained,
demanding users and the managers and technicians
to serve them. These resources were all available
when the Chinese decided to connect to the Inter-
net and made it a priority. We saw the simultaneous
impact of Chinese economic, trade, and industrial
policy of the 1990s in Figures 2 through 4.
The Indian democracy could not act as quickly as
China once it became clear to politicians and policy
makers that the Internet would become an impor-
tant infrastructure. Its response was a series of pub-
licly visible action plans. The Chinese executed their
plans more rapidly. Although India published and
discussed action plans and began changing laws
and regulations, China allocated resources and built
infrastructure.
All nations have had to deal with the inertia
found in established incumbent telephone compa-
nies, but the Chinese economic and political system
allowed China to establish quickly competing Inter-
net backbone networks and ISPs whereas the Indian
Internet remained under control of VSNL. The Chi-
nese were also able to authorize VOIP without hesi-
tation, whereas several years of black-market activity
and haggling were needed to do the same in India.
Twenty years after they were established, the re-
gional Bell Operating Companies remain a conserva-
tive force in the United States. It will be interesting
to watch the evolution of the incumbent telecom-
munication companies and their descendents in In-
dia and China.
The Chinese mixing of competition and commu-
nism strikes some as ironic, but there is nothing in-
consistent in competition among government-
owned enterprises. China could quickly establish
competing Internet service providers at all levels, but
India ªrst had to enact regulations allowing compe-
tition, and then organizations had to decide to com-
pete and raise capital. This competition by decree
clearly jump-started the Internet in China.
The strategy of fostering competition among
government-owned or -controlled organizations has
been pursued with some success in China, Singa-
pore, and Vietnam. China may become stuck with
new incumbents, which are slow to adopt new
technology. India’s market approach may prove su-
perior in the long run, or China may continue to
lead. In any case, this strategy seems worthy of con-
sideration in these and possibly other nations, and
we will continue to follow the progress.
Although competition can coexist with commu-
nism, it is not surprising that privatization has gone
more slowly in China than in India. Pressure from
the WTO and market forces may dilute this policy,
bringing the two closer together. It will be interest-
ing to see how “communist” the Chinese Internet is
in 10 years.
Looking to the future, we expect some of the
factors we have mentioned to continue to work to
the advantage of the Chinese. Their general econ-
omy will continue to be stronger than India’s, pro-
viding internal capital to invest and attracting
foreign investment. The lead China has built in tele-
communication infrastructure and the manufacture
of IT will also continue for some time. The basis for
these was laid in policy decisions dating back to the
1980s, and China’s advantage will not be overcome
quickly.
On the other hand, India’s market orientation
may help it adapt quickly and overcome some of the
initial advantage conferred by China’s ability to exe-
cute plans quickly. The political systems of the two
nations have also led them to different approaches
to the Internet. China is attempting to maintain
control over access and content, whereas India’s
Internet is open. Nobel Prize economist Amartya Sen
points out that freedom is both a facilitator and
constituent of human development and is conducive
to economic development. Chinese control may di-
minish the economic impact of the Internet in the
long run.
The contacts and business relationships both
have fostered with foreign ªrms and expatriates will
continue to be important, and it is difªcult to single
out a clear leader here or in human capital. Chinese
literacy and general education lead India, but India’s
English-speaking professional class is an advantage
in our increasingly global IT industry. External factors
such as pollution, religious conºict in India, conºict
with Pakistan or North Korea, and so on also intro-
duce uncertainty into the future of the Internet in
these nations.
In spite of the differences in China’s and India’s
approach to the Internet, their similarities may be
more telling. Both are developing nations, and the
state of the Internet in China is much closer to that
58 Information Technologies and International Development
The Internet in India and China
of India than, say, that of the United States or Ja-
pan. The expatriate community has been an impor-
tant source of ideas, expertise, contacts, and funds
for both India and China. Most important, with
large, unserved populations, they both face the
same demographic and geographic problems, and in
this they are representative of much of the world.
These are the earliest days of the Internet and
modern IT. We are hopeful that both India and
China will make signiªcant innovations in the fu-
ture. If necessity is the mother of invention, India
and China are both in a good position to innovate
in discovering and deploying applications that are of
value to impoverished and rural populations.
Yoshio Utsumi, secretary general of the ITU,
points out that “1.5 million villages in the world still
lack a basic telephone connection” and states that
“the time has come to add information to the list of
basic human needs,” along with food, clothing, and
shelter.28 If the Internet can improve rural education,
health care, entertainment, news, economy, and so
on, the ºow of people to crowded cities may be di-
minished and Utsumi’s vision may be realized. To be
a human success, the Internet must succeed in India
and China.
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