Information and communication technologies (ICT) are vital for China to sustain its rapid economic growth and for it to become an innovation-driven society, according to a report by the World Bank.

"Developing a more effective ICT strategy will help China to achieve its social and economic goal," the report said.

Titled "China's Information Revolution: Managing the Economic and Social Transformation", the report is the first to map out China's ICT landscape and assess the key factors for the sector's growth, such as legal framework, telecom infrastructure and human resources.

Over the years, the ICT industries have become a key driver for the nation's economic growth. In 2006, ICT industries accounted for 7.4 percent of the gross domestic product. And, the IT industry has been growing two to three times faster than the overall GDP in the past 10 years, according to the World Bank.

China now has the world's largest telecom market and second-largest Internet user population. By the end of 2006, it had more than 144 million Internet users and 480 mobile phone subscribers, luring leading global telecom companies such as Nokia and Motorola to set up manufacturing and R&D facilities here.

"Information and communication technology is a general-purpose technology that could make process and product innovation much easier," said Christine Qiang, author of the report and senior economist at the bank, adding development of ICT could fundamentally restructure an economy.

China has long relied on manufacturing for its economic growth but has vowed to change its growth pattern and set a goal to become an innovation-driven economy by 2020.

The report said China needs to further reform the laws and regulations in areas such as telecommunications, access to government information, data protection and privacy. It also needs to invest more to provide rural residents access to telecom infrastructure.

More than 20 percent of urban residents have access to the Internet, compared with only 3 percent in the countryside, according to China Internet Networks Information Center, a quasi-government organization.

The country is now drafting its first telecom law and will soon set up its first universal service fund, which subsidizes telecom operators for providing services in rural areas.

Editor: Yan