Although China's Internet penetration rate was 42 per cent as of last count, the South Asian giant continues to hold on to the number one post in terms of users. A report from China Internet Network Information Centre (CNNIC) released on Wednesday said the penetration rate went up by 2 per cent to 44 per cent as number of users rose to 591 million.

But despite having the most number of Internet users in the world, by country, a substantial number of Chinese are not yet connected due to lack of knowledge about computers or find little need to use the Internet.

This disconnection is particularly felt in rural areas in China where Internet penetration rate is only 28 per cent.

What helped boost the number of Chinese Internet users are mobile phones, with about 70 per cent of new Internet users surfing the Web using their handheld units, while only 35 per cent access the Internet with desktop PCs and 12.7 per cent with laptops.

With a total population of more than 1 billion and rising wealth across the nation, China has become the world's biggest market for many consumer items, including smartphones that by the end of 2012, 240 million units of smartphones were shipped to China, almost double the number of smartphone shipments to the once number one market, the U.S.

The CNNIC report said that the favourite use of Chinese was instant messaging, followed by search engines, news Web sites and music sites. Among the other usages gaining popularity in the country are online shopping, group buying and travel reservations.

Although the Chinese communist government encourages residents to go online for business and education, it blocks access to Web sites that are considered subversive or lewd.

To address the non-stop surge in demand for smartphones, tablets and other wireless devices, Internet companies are rushing to roll out products and services. For instance, Baidu, the most popular search engine in China, announced this week that it will spend $1.9 billion to purchase 91 Wireless Websoft, a distributor of smartphone apps.