ABSTRACT
Chapter 6 seeks to establish an academic framework to explain the potentially beneficial effects of the Internet on the Chinese economy. Within this framework and using data drawn from investigations and statistics, this chapter discusses the spread of the Internet in China and the growth in Internet investment, analyzing the spill over effects or externalities of the Internet in China on the following areas: on a selection of major industries, on the adjustment of the industrial structure, on the growth of the local economy, on the reform of traditional industries, on employment opportunities and on the transformation of competitive advantages among the companies. Finally, it reviews Chinese informatization policies and their impacts. The author considers that the Internet not only offers a way to shorten the distance between China and the developed countries by improving communication generally, but also provides tools that may be implemented to narrow the digital divide between China and the developed countries. Although there has been a lack of investment in the Internet in some areas, there is a substantial amount of evidence to show that the Internet has made a positive impact on economic growth in China.1
