Home computer ownership and Internet use in China: Trends, disparities, socioeconomic impacts, and policy implications
First Monday

Home computer ownership and Internet use in China: Trends, disparities, socioeconomic impacts, and policy implications by Qingbin Wang and Minghao Li



Abstract
This paper reviews the trends of China’s home computer ownership and Internet use, analyzes the disparities in computer ownership, and examines the impacts of increasing computer and Internet use on e–commerce and trade, Internet addiction and public health, family and marriage relationships, and public policy and democracy. Analysis results suggest that average income and urbanization have been the key factors behind both the growth of and the disparities in home computer ownership and Internet use in China. Also, the increasing use of computers and the Internet has resulted in both positive and negative impacts in Chinese society and brought about opportunities and challenges for human development.

Contents

Introduction
Trends and disparities in home computer ownership in China
A regression analysis
Socioeconomic impacts and policy implications
Concluding remarks

 


 

Introduction

China surpassed the United States and became the world’s largest Internet user in 2008 and the world’s biggest PC market in the second quarter of 2011. In terms of the Internet penetration rate (IPR), defined as the percentage of Internet users in the total population, China’s IPR increased steadily from 1.7 percent in 2000 to 36.3 percent in 2011 (Internet World Stats, 2011; People’s Daily Oversea Edition, 24 August 2011). Also, China’s total Internet sales increased from about one billion Chinese renminbi (RMB) in 2003 to 56.1 billion RMB in 2007 and reached 498 billion RMB in 2010 (China Internet Network Information Center [CNNIC], 2010; Internet World Stats, 2011). The dramatic growth in the number of Internet users and Internet sales in China was largely due to the increase in home computers and to improved accessibility to the Internet at home, in offices, in Internet cafes, and via cell phones. For example, according to data published by the National Bureau of Statistics of China (NBSC) (2010), the average number of home computers per 100 urban households in China increased steadily from 5.91 in 1999 to 65.74 in 2009, or at an average of 27.24 percent per year.

While the dramatic growth in China’s home computer ownership and Internet use, together with other information communication technology (ICT) such as cell phones, has had significant socioeconomic impacts, few studies have examined the trends and disparities in computer ownership and Internet use and their socioeconomic impacts and policy implications. As a large country with an average annual economic growth rate of more than 10 percent and dramatically expanding use of ICT in the past two decades, China provides an excellent case to study the general relationship between economic growth and ICT as well as the socioeconomic impacts of ICT. The major purpose of this paper is to enhance understanding of both the changes in China’s home computer ownership and Internet use and the socioeconomic impacts of these changes, using the most recent available data and information from China. Specifically, this paper reviews the trends of China’s computer ownership and Internet use in the past decade, analyzes the disparities in computer ownership between rural and urban households and across geographic regions, identifies the factors that have contributed to the trends and disparities in computer ownership, examines the impacts of increasing computer and Internet use on e–commerce and trade, public health, family and marriage relationships, and public policy and democracy, and discusses policy implications.

 

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Trends and disparities in home computer ownership in China

Data on China’s computer ownership and Internet use have been limited, but the NBSC has started to publish more data in recent years. The NBSC data on computer ownership, presented in Figure 1, indicate that the average number of computers per 100 households increased steadily from 5.91 in 1999 to 65.74 in 2009 in urban China and from 0.43 in 2000 to 7.46 in 2009 in rural China. The data were compiled from China’s annual national urban and rural household surveys conducted by NBSC. Figure 1 suggests a steady growth in home computers in both urban and rural China in the past decade and a huge gap between urban and rural households.

The United Nations (U.N.) Statistics Division has published data on computer ownership for many nations for up to 2006, but the U.N. statistics are the number of computers per 100 people, not per 100 households. In addition to the U.N. numbers available for 1991 to 2006, we calculated the number of computers per 100 people in China from 2000 to 2009 on the basis of the data presented in Figure 1, the average household size in urban and rural China, and the urban and rural population published by the NBSC. Results reported in Figure 2 suggest that the number of computers per 100 people in China increased steadily from 0.1 in 1991 to 11.6 in 2009. Also, the U.N. numbers are very close to our estimated numbers for 2001–2003 but are significantly higher for 2000 and lower for 2004–2006. With a population of 1.33 billion, China’s estimated total number of home computers in 2009 was around 154.8 million.

 

Figure 1: Home computers per 100 households in China, 1999–2009
Figure 1: Home computers per 100 households in China, 1999–2009.

 

China’s IPR, presented in Figure 3, indicates that the percentage of Internet users in the Chinese population increased steadily from 1.7 percent in 2000 to 36.3 percent in 2011. Although China’s IPR is still significantly lower than that in several other Asian countries such as South Korea (80.9 percent), Japan (78.4 percent), Singapore (77.2 percent), and Malaysia (58.8 percent), China’s rate has increased more quickly than that of many other Asian countries (Internet World Stats, 2011).

 

Figure 2: Home computers per 100 people in China, 1991–2009
Figure 2: Home computers per 100 people in China, 1991–2009.

 

 

Figure 3: Internet penetration rate (IPR) in China, 2000–2011
Figure 3: Internet penetration rate (IPR) in China, 2000–2011.

 

Figure 4 presents the number of home computers per 100 urban households in 2009, sorted into seven income groups. The data were compiled by the NBSC from its national urban household survey, and the three income groups in the middle each comprised 20 percent of the surveyed households, while the other four groups each comprised 10 percent of the surveyed households. Figure 4 indicates that the variation in computer ownership in urban China is closely related to per capita income level: households with higher average income are more likely to own computers, and households with lower income are less likely to own computers. This finding is consistent with the result from many other nations (Demoussis and Giannakopoulos, 2006; Chinn and Fairline, 2010).

 

Figure 4: Home computers per 100 households by income groups in urban China in 2009
Figure 4: Home computers per 100 households by income groups in urban China in 2009.

 

In addition to the huge gap in computer ownership between rural and urban households shown in Figure 1 and the disparity across income groups in urban China shown in Figure 4, there are also significant disparities in computer ownership across geographic regions for both urban and rural households in China. The average numbers of home computers per 100 households in 31 province–level regions in urban and rural China in 2009 are presented in Figure 5. Note that Hong Kong and Macau, two special administrative regions of China, are not included in this study. Figure 5 suggests at least two conclusions. First, there are huge disparities in home computer ownership across the 31 regions for both urban and rural households. Second, regions with more computers among their urban households are generally more likely to have relatively more computers among their rural households as compared to other regions.

 

Figure 5: Home computers per 100 households in 31 regions in China in 2009
Figure 5: Home computers per 100 households in 31 regions in China in 2009.

 

 

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A regression analysis

Whereas data presented in the previous section indicated significant variations in home computer ownership across regions and income groups, this section presents a quantitative analysis for identifying the factors that have contributed to the disparities in computer ownership in China. Data used in the analysis are the pooled time series (2005–2009) and cross–sectional (31 regions) data from the China Statistical Yearbook, published by the NBSC (data for years prior to 2005 are not available). Because of the significant differences between urban and rural areas in many factors, this study estimated a regression model for urban households and another model for rural households. The dependent variable in each of the two regression models, Yij, is the number of computers per 100 households in region i and year j, and the two independent variables are the per capita disposable income (DIij) and the percentage of urban population (PUij). The impacts of several other possible independent variables, such as household size, education level, population structures, and so on, were also tested, but the results indicated that they were highly correlated to per capita disposable income (DI) and/or the percentage of urban population (PU) and are therefore not included in the final regression models.

The data sets, with 155 observations for urban households and 152 observations for rural households (there were two missing observations in 2005 and one in 2009), were used to estimate two linear regression models. The estimated results are as follows:

Urban model:
equation
N = 155, R–squared = 0.924, adjusted R–squared = 0.852, and F–value = 445.265
 
Rural model:
equation
N = 152, R–squared = 0.904, adjusted R–squared = 0.817, and F–value = 333.435

where the numbers in parentheses are the corresponding t–ratios of the estimated coefficients, N is the number of observations, R–square and adjusted R–square are the coefficients of determination, and F–value is the statistic for F–test.

While the coefficients of determination and the F–value of the urban model indicate that the estimated regression model fits the data very well and explained more than 92 percent of the variation in the dependent variable, the estimated coefficients and their t–ratios suggest that both the per capita disposable income (DI) and percentage of urban population (PU) showed positive and significant impacts on the number of computers per 100 households in urban China.

Similar to the urban model, the estimated rural model fits the data very well and explained more than 90 percent of the variation in the dependent variable. The estimated regression coefficients suggest that per capita disposable income (DI) showed a positive and significant impact on the dependent variable, and the percentage of urban population (PU) had a positive but insignificant impact on the dependent variable. It is interesting to note that the estimated coefficient of the income variable in the rural model is very close to that in the urban model, indicating that per capita disposable income has a similar impact on computer ownership among both urban and rural households in China.

 

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Socioeconomic impacts and policy implications

This section examines some major socioeconomic impacts of the increasing use of computers and the Internet in China and discusses their policy implications. Most of the data and information cited in this section are from recent publications and reports published in newspapers in English or Chinese.

E–commerce and trade

As discussed in the introduction, Internet sales in China have increased steadily in the past decade and reached 498 billion RMB in 2010. The dramatic growth in China’s e–commerce is closely related to its rapidly growing per capita income, the increasing availability of computers and cell phones with an Internet connection, the relative lack of national chain retailers, diversified consumption and production patterns across regions, and increased domestic and foreign investment in e–commerce (Zhao, et al., 2008). For example, since it was founded in 2003, Taobao.com has emerged as the largest Internet retail company in Asia, with more than 170 million registered users and gross sales exceeded 200 billion RMB in 2009 (Alibaba.com, 2010). Similarly, Alibaba.com has become a global leader in business–to–business (B2B) trade online, with more than 61.8 million registered users worldwide at the end of 2010 (Alibaba.com, 2011). Both Taobao.com and Alibaba.com are operated by the Alibaba Group, founded in China in 1999. The group’s stock has been traded in the Hong Kong Stock Exchange since November 2007. The Alibaba Group also operates Alipay.com, similar to PayPal, and the Chinese branch of Yahoo! Alipay.com has developed many mechanisms to improve the safety and convenience of online payments, and it facilitated nearly US$20 billion in online payment transactions in 2008 (Alibaba Group, 2009). The growth and returns of the Alibaba Group and several other large e–commerce companies in China suggest that e–commerce will continue to grow at a significant rate in the coming years.

The growth of e–commerce in China has benefited many consumers, especially young people. The Internet allowed consumers to purchase both goods not available in the local markets and locally available goods at lower prices. The growth of e–commerce has also provided opportunities for farmers, farm cooperatives, small businesses, and entrepreneurs. Recent reports from China indicate that the number of Internet users in rural China increased from 37.42 million in June 2007 to 115.08 million in June 2010 (CNNIC, 2010). The central, provincial, and local governments have also made significant investment for promoting Internet sales of farm products, especially in regions with limited market channels or significant surpluses of local products.

Furthermore, e–commerce has provided opportunities for many entrepreneurs, especially young college graduates. According to a recent report (Lin and Qin, 2009), about 570,000 of the registered users of Taobao.com are self–employed entrepreneurs. When the indirect contributions through other sectors such as shipping and services are included, e–commerce has likely generated more than two million jobs in China (Lin and Qin, 2009).

On the other hand, the growth of e–commerce has resulted in challenges for some sectors in China. For example, a significant number of bookstores went out of business in Shanghai and many other cities in recent years, largely because of increasing book sales via the Internet (Cao, 2009). Many readers visited the bookstore to check and select books and then purchased the books from the Internet, where prices were lower. According to one estimate, bookstores in China keep about 36 percent of the prices paid by consumers, and that 36 percent share can cover operation costs such as rent and wages only when sales reach a particular volume (Cao, 2009). Internet booksellers, on the other hand, have much lower operation costs and can offer significantly lower prices. As a result, many bookstores have experienced remarkable declines in their sales, and some have declared bankruptcy (Cao, 2009). Also, some surveys have reported that the percentage of people who read books in their spare time has declined significantly in recent years, partially because more people spent their spare time surfing the Internet rather than reading books (Cao, 2009).

From the policy perspective, there are very limited regulations and policies about online business in China. For example, there is a lack of enforcement of the copyright and trademark laws and regulations for online purchases, and the legal responsibilities of manufacturers, sellers, and consumers for products sold online are not clearly defined. As e–commerce continues to grow in China, there is a great need for government regulations and enforcement for online retailing and trade.

Internet addiction and public health

As 36.3 percent of the Chinese population have become Internet users or “netizens,” Internet addiction has emerged as a huge public health and education problem. It has been estimated that four percent to six percent of China’s netizens and about 10 percent of young Internet users are addicted to the Internet (Ye, 2008; Adams, 2009). A more recent report found that 14.7 percent of young netizens (ages 6–29) are Internet addicted and another 12.1 percent have the inclination to become Internet addicted (China Youngster Internet Association, 2010). For the former estimation, the definition for an Internet addict is anyone who spends more than six hours per day for three months or longer on non–work– and non–study–related Internet use; for the latter estimation, Internet addiction is defined by a set of behavior indicators like “feel unsettled when Internet is cut off by some reason.” Over 70 (71.2) percent of China’s netizens are under the age of 30 (CNNIC, 2010), and most Internet addicts are teenagers and college students. According to some estimates, about 13 percent of college netizens in China are Internet addicts, as compared to only eight percent among American college netizens, and about 14 percent of teens in China are vulnerable to becoming addicted to the Internet (Cha, 2007; China Youngster Internet Association, 2010; Adams, 2009). Many Internet addicts drop out of school, and some land in jail or commit suicide. A report from Beijing indicates that 76 percent of the juveniles charged with criminal activities are addicted to the Internet (People’s Daily Oversea Edition, 10 November 2008). In response to this emerging problem that has already affected so many families, the Chinese government has launched a set of campaigns and interventions. For example, China is likely to become the first nation in the world to define and set a diagnosis standard for “symptoms of Internet addiction disorder (IAD)” (Ye, 2008). Also, the Chinese government has implemented measures such as banning youths from Internet cafes and requiring a minimum distance between Internet cafes and schools. Because Internet games are recognized to be strongly linked to Internet addiction, the Chinese government has started to identify measures for controlling Internet games. For example, the government may require online game suppliers to impose time limits on the use of their products. The government has also enforced the inspection of the Internet cafes and Web sites (People’s Daily Oversea Edition, 27 March 2009).

Many rehabilitation centers have been established around China to treat Internet addicts, and some of them have reported encouraging results. Although IAD has been debated in the international healthcare community and some measures of treating IAD in rehabilitation centers in China have been questioned by healthcare professionals abroad, few countries have been as effective as China in fighting drug and other addiction. Internet addition may become a major unwanted side effect of the Internet in many countries, and China’s experience may provide useful information and lessons to other countries.

Family and marriage relationships

Reports from China suggest that the increasing use of the Internet has affected family and marriage relationships in at least two ways. First, the Internet has provided a unique way for users to make new friends and even meet a spouse without location and many other restrictions. Internet friendship and dating Web sites are widely available across China, and many Internet users have registered with such sites. For example, Match.com, founded by a college student in Shanghai in 2003, has emerged as one of the world’s largest dating Web sites, with about 14 million registered members in 2008 (Li, 2008). According to the report of China’s first Internet user dating and marriage survey, conducted in 2008 (People’s Daily Oversea Edition, 1 November 2008), among the 154,386 surveyed Internet users, 70,227, or 45.5 percent, have tried to find a spouse through dating Web sites and about five percent of the married respondents met their spouse over the Internet. The percentage of those trying to find a spouse through dating Web sites in China is likely greater than that in the United States. According to Penn and Zalesne (2007), about 1.6 million, or 25 percent, of the single men and women in the United States were searching for a spouse through dating Web sites and the net income of these Web sites increased from about US$40 million in 2001 to US$470 million in 2004. As compared to developed countries such as the United States, China and many other developing countries seem to be more attracted to Internet dating, possibly because of relatively limited opportunities to make friends through leisure, social, and religious activities.

Second, while the Internet has provided opportunities for users to make friends and find spouses, it has also caused many family and marriage problems. For example, many family relationship problems among Internet users started with a husband or wife spending too much time on the Internet and ignoring the family chores and responsibilities. Also, for some married individuals, Internet friendship could develop into adultery or result in divorce. Following an extremely low divorce rate from the 1950s to the 1970s, China’s divorce rate, measured by the number of divorces per 1,000 married people, has increased significantly since the early 1980s, from 0.85 in 1980 to 3.00 in 2009 (Wang, 2001; NBSC, 2010). Although there is no empirical data to quantify the impact of increasing Internet use on the increasing divorce rate in China, researchers in China have suggested that a significant number of divorces in recent years started with Internet affairs. Several studies have reported on the link between Internet affairs and romances and divorces in other nations. See Hertlein and Piercy (2006) for a review of literature on Internet infidelity.

Public policy and democracy

The increasing use of computers and the Internet has brought about significant changes in Chinese citizens’ political life, including information availability, stakeholder participation, transparency of government decision–making, and public auditing of government performance (Hughes and Wacker, 2003). Most government agencies, especially at the central, provincial, and city government levels, have made significant progress in providing information and services over the Internet. For example, residents in many areas are able to renew certain permits and licenses, pay taxes and utility bills, and file complaints online. Some government agencies such as the Ministry of Railways have held public debate and hearings online regarding their proposed policy changes. According to an Internet survey conducted by the People’s Daily in January 2009, 87.9 percent of the surveyed Internet users were very interested in public auditing of government performance via the Internet and, when they experience an unfair social event or treatment, 99.3 percent of them choose to report it online (People’s Daily Oversea Edition, 9 February 2009). As government corruption has been the top public concern in China in recent years, Internet users have publicized many corruption cases online and the information reported online has led to the arrest of many government agents, including some high–level government officers.

Many Internet users have also organized and participated in Internet–based community groups for promoting particular public agendas or solving public problems. While China’s public election of congressional representatives and community officers has been questioned by some international organizations, the Internet and other ICT have had significant impacts on public elections. For example, the public is able to learn more about the candidates, ask questions, and make comments. Also, more and more candidates, including individuals without any political background or connection with the government, have used the Internet to gain public support. For example, as reported by the People’s Daily Oversea Edition (20 February 2009), one resident in Luoyang City in Henan Province started his election campaign for the City Committee of People’s Congress over the Internet. With strong support from people he met online and their volunteer efforts in the community, he was successfully elected to the committee.

Since its economic reform started in 1978, China has moved gradually and remarkably from a centrally planned economy toward a market economic system and has achieved rapid economic growth and improvement in living standards. Although the “socialist democracy” promoted by the Chinese government has been questioned by Western countries, it has been a general trend in China that the government is gradually reducing its direct involvements in many socioeconomic activities. The increasing use of the Internet and other ICT has provided new channels for Chinese people to learn more about democracy, voice their concerns and opinions, and monitor government operation and performance. For the government, the Internet and other ICT have provided new communication channels to understand public concerns, deal with government problems such as corruption, and improve the efficiency and coordination of different government agencies at different levels. For example, Chinese Premier Wen has held Web sessions and answered questions online (People’s Daily Oversea Edition, 2 March 2009).

 

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Concluding remarks

This study was motivated by the dramatic growth in China’s computer and Internet use in the past decade and by the limited research on the socioeconomic impacts of the Internet and other ICT. Using the most recent available data and reports from China, this paper has reviewed the changes in China’s computer ownership and Internet use in the past decade, identified the disparities in computer ownership between urban and rural households and across geographic regions, and examined some major socioeconomic impacts of the Internet. Under a gradual transition toward a market economic system and with remarkable growth in income and ICT adoptions, China’s experience in the past two decades may provide an excellent case for studying the general relationship between economic growth and ICT and the socioeconomic impacts of ICT.

Findings from this study suggest that income and urbanization have been the key factors behind growth in computer ownership and Internet use and the disparities in computer ownership between urban and rural households and across geographic regions in China. Also, the increasing use of computers and the Internet, together with other ICT, has resulted in both positive and negative impacts in Chinese society and some of the impacts, such as e–commerce and Internet addiction, have been widely reported by the mass media. As the average income continues to increase, there is almost no doubt that more Chinese will own computers and use the Internet and this trend will bring about both opportunities and challenges for human development and democracy in the world’s most populous country. For example, individuals may purchase goods and services; find information, employment, and even spouses; participate in educational and training programs; express political opinions and participate in public policy–making; and, promote community and social agendas over the Internet.

Also, the Internet may have the potential to reduce the inequality of opportunities for education and information between urban and rural areas and across geographic regions. For example, a computer with an Internet connection in a school in a mountain village will enable those students to obtain information that had previously been available only to students in cities. As part of China’s stimulus plan announced recently, 20 billion RMB, or US$2.9 billion, from the central government, plus more from the provincial, city, and local governments, have been allocated to subsidize rural households for purchasing electronic products such as refrigerators, televisions, cell phones, air conditioning units, and computers (China Daily, 27 February 2009). The investment is expected to boost electronic sales in rural areas and reduce the gap between rural and urban households in living standards and in the ownership of ICT products, including computers and cell phones. As computer and Internet use continues to grow across China, China is likely to remain the world’s largest Internet user and may play an important role in e–commerce and in dealing with Internet–related problems such as Internet addiction. More studies are needed to understand China’s experience and to derive lessons from China that could be relevant and useful to other nations in the Internet age. End of article

 

About the authors

Qingbin Wang is a professor of applied economics in the Department of Community Development and Applied Economics at the University of Vermont.
E–mail: qwang [at] uvm [dot] edu

Minghao Li is a graduate research assistant in the Department of Community Development and Applied Economics at the University of Vermont.
E–mail: Minghao [dot] Li [at] uvm [dot] edu

 

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Editorial history

Received 13 September 2011; accepted 15 January 2012.


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“Home computer ownership and Internet use in China: Trends, disparities, socioeconomic impacts, and policy implications” by Qingbin Wang and Minghao Li is licensed under a Creative Commons Attribution–NonCommercial–NoDerivs 3.0 Unported License.

Home computer ownership and Internet use in China: Trends, disparities, socioeconomic impacts, and policy implications
by Qingbin Wang and Minghao Li
First Monday, Volume 17, Number 2 - 6 February 2012
http://firstmonday.org/ojs/index.php/fm/article/view/3767/3144
doi:10.5210/fm.v17i2.3767





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