China has overtaken the US to become the world's largest online retail market as its E-commerce revenues grossed $439 million (roughly Rs. 2,866 crores) last year constituting 7 percent of its GDP, according to a new report.

The Internet has become a critical element of China's economic progress in the past five years, accounting for seven per cent of the world's second largest economy's gross domestic product (GDP) in 2014, a percentage point higher than the US, state-run Global Times reported, citing a report issued by China Internet Network Information Centre (CNNIC).

China has exceeded the US to become the world's largest online retail market, it said as the online retail transactions reached CNY 2.79 billion (roughly Rs. 2,866 crores) in 2014, one of the key economic achievements of China's Internet development during the 12th Five-Year Plan period (2011-15).

However, according to US journal Statista, US online sales last years accounted to about $290 billion (roughly Rs. 18,93,664 crores). Commenting on China's progress, Qin An, a cyber-security expert at the China Institute for Innovation and Development strategy, told the Global Times that "China has followed the world's trend to become a leader in e-commerce thanks to its favourable policies and competitive enterprises."

According to CNNIC, there are so far 328 listed Internet companies in China, whose total market cap reached CNY 785 trillion, accounting for 25.6 percent of the nation's market capitalisation. Four of them have made their way to the top 10 world Internet companies, including Alibaba.

In 2014, the number of online shoppers climbed to 361 million, representing 55.7 percent of the nation's shoppers. Online shopping represents 20 percent of all consumer demand, the report said. For the first time mobile phones have become the most commonly-used platform to access the Internet, followed by computers. Some 594 million people in China can access to the Internet through mobile phones.

The number is 86.8 percent higher than in 2005-10. The Internet also boosted growth in related industries such as smart phones, servers, storage and Internet infrastructure, Global Times quoted the report as saying. E-commerce was able to thrive in China because it was from the beginning competitive with its Western counterparts, whereas the nation's traditional retail businesses are not as developed as those in the West, said Wang Xiaoxing, an industry analyst from consultancy Analysys International.

On cyber-security, the report noted that China has issued 76 regulations and documents relating to cyber-security, over 2.6 times of that of 2005-10, while many special operations have been carried out to regulate the Internet, including a crackdown on pornographic and violent content.

China remains a key victim of cyber-attacks despite all the measures in the 12th Five-Year Plan period, which have failed to meet the expectations, Qin said.

Qin added that a better guarantee on the development of an industry aiming to protect Internet security should be listed as a national strategy.