Rebuilding drive to boost IT sector

The reconstruction of areas affected by the earthquake is expected to have a positive impact on the IT sector across the country, a research firm said in a report.

While the quake damaged important IT sectors in the region, the report by IDC said its impact will be felt only in the short term as the next three years will see increased spending in the sector.

The growth rate of the total IT spending in China will decline 1 percent this year due to the slight slowdown of China's economy that was disrupted by the earthquake, IDC said.

But IT spending in the country will grow 1 to 2 percent faster than the earlier estimation in the next three years due to an increasing demand created by the country's rebuilding work.

Demand for hardware, such as PCs and servers, will decline in the short term as consumers' purchasing plans were disrupted by the earthquake. It also expects that spending in software and related services will decline.

"We estimate that China's IT spending will see a rebound next year as the country starts to reconstruct its disrupted infrastructure," IDC said. It said the rebuilding of telecom networks and schools in the disrupted areas will result in a surge in IT spending.

IT spending in China was estimated to reach $46 billion last year, according to an earlier report by IDC. The number was expected to increase with an annual average growth rate of 11.4 percent from 2008 to 2011.

The telecom network in Sichuan province was paralyzed as the earthquake cut off fiber-optical cables that carried long-distance calls and destroyed a huge number of base stations. But IDC said the impact will be limited as Sichuan only accounted for 3.3 percent of China's telecom market.

IDC estimates that the country's PC market growth rate will decline 2 percent.

But it is estimated that the reconstruction of 3,000 schools in Sichuan province will generate hundreds of thousands of PC orders leading to a market rebound by the end of the year.

It is also thought that China's software market will see a 0.1 percent decline as a result of companies in the region postponing software spending.

It is predicted that the IT service market will also see a 1.5 percent decline as a result of the earthquake's impact in Chendu, Sichuan province, one of the centers of China's IT service market.

IDC said this impact will also be temporary.