BEIJING -- The number of internet users in China hit 1.1 billion by December 2024, up 16 million from the previous year, according to an industrial report on the country's internet development released on Friday.

This milestone highlights the vast potential of China's digital economy and its key role in driving technological innovation.

The report by the China Internet Network Information Center (CNNIC) revealed that internet penetration in China reached 78.6 percent in 2024, 30 years after the country was fully connected to the global internet.

China now boasts the world's largest internet infrastructure, equipped with advanced technologies, fueling the rapid growth of its digital economy.

By the end of last year, the number of online payment users in China had surpassed 1 billion, while 974 million Chinese people had engaged in online shopping, an increase of 59.5 million people from the end of 2023, according to the report.

"China continues to lead the world in both online retail sales and mobile payment penetration," the report stated.

Data released by China's National Bureau of Statistics on Friday showed that in 2024, the country's total online retail sales reached 15.52 trillion yuan (about 2.15 trillion U.S. dollars), a 7.2 percent increase from the previous year. In particular, online retail sales of physical goods rose 6.5 percent year on year to 13.08 trillion yuan, accounting for 26.8 percent of the total retail sales of consumer goods.

The steady development of China's online retail sector is based on the rapid expansion of 5G and broadband coverage nationwide, spanning both urban and rural areas. As of November 2024, China had built a total of 4.19 million 5G base stations, with the number of gigabit broadband users reaching 209 million.

Stable internet connectivity has helped foster online shopping among a wider range of internet users, including the elderly and rural residents. According to CNNIC, nearly 70 percent of netizens aged 60 and above and over 76 percent of rural internet users shop online.

Short video and live stream platforms have become a major medium for online shopping, especially for rural netizens. Data from the center shows that approximately 71 percent of short video and live-stream viewers have made purchases after watching, with more than half of users regularly tuning in to live-stream sales.

According to Chen Jing, an analyst at CNNIC, live-streaming and short videos are increasingly playing a crucial role in shaping digital consumption decisions in China, creating an online shopping pathway that moves from sparking interest to making purchases and sharing experiences.

Emerging from China's booming short video industry, micro-dramas -- typically no longer than a few minutes but with engaging plots -- have become another thriving sector of the digital economy.

As of December 2024, the audience base of micro-dramas in China reached 662 million, accounting for nearly 60 percent of the total internet users, according to the data.

The micro-drama industry directly created and indirectly generated around 647,000 job opportunities last year, and it is expected that the market for micro-dramas could surpass the total box office revenue on the Chinese mainland for the first time in 2024, according to the China Netcasting Services Association.

Online tourism services, a vital component of China's rapidly recovering tourism market, have also experienced significant growth, driven by the accelerated integration of the tourism industry with the digital economy.

As of December 2024, the number of users booking travel online reached 548 million, an increase of 39.35 million from a year ago, representing 49.5 percent of the total internet user base, as shown in the report.

Trip.com Group, China's online travel service giant, reported a net revenue of 15.9 billion yuan for the third quarter of 2024, a 16 percent increase from the same period in 2023.

The company's executive chairman, James Liang, expressed confidence in the "AI-driven technological revolution" shaping the future of the global travel industry.

AI technology, widely applied in online marketing, smart diagnostics, customer service and various other fields, has been driving profound changes in industrial manufacturing and economic growth in China, the report noted.

It revealed that at least 331 million people, or 23.5 percent of China's population, were aware of generative AI products, while 249 million people reported having used them, mainly for answering questions and office assistance.

China is home to over 4,500 AI-related companies, with the core industry valued at nearly 600 billion yuan, according to Zhang Xiao, deputy director of CNNIC.