Besides strong output, the country is also emerging as a leader in technology, thanks to the growth of domestic companies, said Xu Qing, vice director of the committee's high-tech division.

This year, the IT industry output is expected to hit 2.4 trillion yuan (US$289.16 billion) to become the world's third-largest following the United States and Japan, Xu said.

Xu's confidence is based on some new bright spots in the industry, including digital television, integrated circuit manufacturing and third-generation telecommunication application.

"Some domestic companies have been developing the related technologies on their own, such as Legend Group Ltd on digital TV and ZTE Corp on 3G research," Xu said.

Chinese companies now often play a manufacturing role in the IT industry chain without a core technology patent, which brings them less profit, compared with their foreign counterparts.

To buck this trend, the Ministry of Information Industry will spend about US$200 million annually to help domestic IT companies develop their own technologies.

The ministry also plans to launch a software developing platform that domestic companies can share their technology at a low cost.

In addition, the Chinese government plans to establish more integrated circuit manufacturing zones.

Domestic IC companies setting up in the zones will enjoy preferential tax policies.

The output of existing and future chipmakers in the zones is predicted to reach US$15 billion yearly.

In the first 10 months, China's IT industry output reached 1.8 trillion yuan and the IT industry's output contributed 30 percent to the country's economy.

Currently, China's IT output contributes the most to the economy among 39 domestic industries, according to Yao Jingyuan, chief economist of the National Bureau of Statistics.

China's GDP will jump more than 8.5 percent to 11 trillion yuan this year, Yao said.

"China's IT industry will have a bright future because the world's economy has began to rebound, as well as fast growth of the Chinese economy," he said.

The two-day 2003 Annual Economic Conference of China IT Industry attracted more than 400 participants.