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China has proclaimed itself the world's largest Internet market, with 221 million Internet users, state media reported Thursday.

The Ministry of Information Industry (MII) cited statistics from the China Internet Network Information Centre (CNNIC), a quasi-government organization that reports to the MII. China reached the magic mark at the end of February, English-language newspaper China Daily reported. In March, Beijing-based telecommunications consultancy and research firm BDA China reported that China had overtaken the U.S. in total Internet users.

With its large population, China made reaching the world's top mark look easy. China currently has only 16 percent Internet penetration -- below the world average of 19.1 percent, and well below the approximately 50 percent penetration in the U.S.

CNNIC normally releases Internet population statistics for the previous six months in January and July each year. U.S. Internet measurement firm Nielsen/Netratings estimated the American Internet population at 216 million at the end of 2007.

China began allowing consumer dial-up Internet access in 1995. In August 1996, it began filtering and blocking Internet sites it found objectionable, including pornography, foreign news sites and sites relating to sensitive political issues such as Taiwan and Tibet independence movements. The practice which continues today, although China has promised full and unrestricted Internet access during the 2008 Olympic Games in Beijing in August.

Internet usage in the country grew 53 percent from the end of 2006 until the end of the 2007, when it had 210 million users, according to the January 2008 CNNIC survey. Forty percent of new users came from rural areas, a new area of growth despite China's Internet population still coming largely from major cities like Beijing and Shanghai. CNNIC defines a user as anyone who uses the Internet at least once per month for any function.

The January survey also revealed that for the first time, the number one use of the Internet in China was online music, the application of choice for 86.6 percent of users. E-mail placed only fifth, with 56.5 percent of users. They seem to be communicating via instant messaging instead, an application used by 81 percent of users.

On its way to the top slot, China has produced some of its own Internet brands. Alibaba.com, of which embattled Yahoo owns 40 percent, became one of Asia's largest Internet companies following its initial public offering in Hong Kong in November raised US$1.5 billion. In three years, its Taobao consumer auction site overtook eBay's Chinese site, eBay Eachnet, and forced the U.S. auction giant out of the market and into a minority joint venture with Tom Online. Alibaba also operates Yahoo's China site. Baidu has dominated the local search market, soaking up over 60 percent of all Chinese search queries and pounding Google in the process.

The U.S. should be safe in the number two position for a few years: third-place India had only 60 million users as of September 2007, according to the International Telecommunication Union.