No gold from Internet stone, says China's Wu

China's information industry minister said the incredibly high prices of Internet stocks "were not for real"

By CNN's Geoff Hiscock, Asia business editor

HONG KONG, China (CNN) -- China's information industry minister Wu Jichuan launched a stinging critique of the Internet stock bubble Tuesday, saying dotcom buzzwords were no substitute for hard work and creativity.

Wu also urged an end to restrictions on technology transfer, and painted a glowing picture of China's potential as a market for information technology goods and services.

Addressing a technology and business roundtable in Hong Kong, Wu said the incredibly high prices of Internet stocks before the bubble burst last year "were not for real".

"There is nothing in this world that makes gold from stone," Wu told a gathering of information industry leaders at the first event of the Fortune Global Forum in Hong Kong.

Among those taking part in the roundtable with Wu were Internet entrepreneurs such as Charles Zhang of Sohu.com, Peter Yip of Chinadotcom, Wang Chidong of Sina.com and Richard Li of PCCW.

Massive tumbles in stock prices

All of them have seen their stocks take massive tumbles since the dotcom boom reached its peak in the the first few months of last year.

Nonetheless, all of them shared Wu's optimism towards the China market. Zhang of Sohu.com said China was at a "historical point" where the Internet market would grow from 30 million users now to 100 million in the next few years.

Wang of Sina.com said that while the dotcom bubble had burst, there had been no impact on Internet growth in China. It had kept "very high".

Another roundtable participant, Sybase chairman and chief executive John Chen, said much of the IT market in the U.S. and Europe was saturated, making China an ideal investment destination.

IT delivers clear boost to productivity

Wu, known for his uncompromising stance on the direction China's information industry should take, said it was clear that information technology enhanced productivity and drove costs down. But he said it was no substitute for the materials necessary for survival.

Wu also called on advanced nations to end restrictions on technology transfer, saying this would help bridge the digital divide.

The U.S. and other advanced nations limit the export of what they regard as sensitive technology. Allegations of industrial espionage have been a major irritant in U.S.-China relations, particularly in the high-tech sector.

Wu said technology should be "broadly commercialized" for the benefit of developing nations.

"Otherwise, all the talk of bridging the digital divide will just be empty words," he said.

China market heading for 500m users

Wu noted that China's fixed and mobile phone user population would more than double over the next five years from 230 million now to 500 million. This would give the country 40 percent penetration -- still low by advanced nation standards, but the world's largest market.

Nokia chief executive Jorma Ollila said his company -- which is the world leader in mobile phone sales -- had already invested $1.7 billion in China and planned to "keep going."

Responding to Wu's comments on the digital divide, Ollila said more of Nokia's future investment in China would go to software, research and development, and technology transfer.

The Fortune Global Forum is organised by Fortune magazine, a unit of AOL Time Warner. CNN is also a division of AOL Time Warner.

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