162 million Internet users in China

The China Internet Network Information Center (CNNIC) is a government body that releases officially approved statistics, as well as surveys and research reports about the Internet in China.

They have released their latest calculation for the number of Internet users in China (as of June 30, 2007):

Internet Users:162,000,000

Websites hosted in China:1,311,600

This Shanghai Daily article has more statistics.

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