Chinese gamers spent USD 1.7 billion on online games in 2007, up 71 per cent from the prior year, according to market intelligence firm Niko Partners.
The firm expects online revenue to reach USD 2.5 billion this year and USD 6 billion by 2012 - a 29 per cent compound annual growth rate for the five-year period.
"China's spending on games is up thanks to their booming economy," said Lisa Cosmas Hanson, managing partner of Niko Partners.
"14 million hardcore Chinese gamers play online games more than 22 hours per week. They play online, LAN, and single-player offline PC games in China's 185,000 Internet cafés and increasingly on their PCs at home, thanks to falling prices and higher disposable income."
Niko Partners also found that Chinese gamers were buying consoles - in spite of regulations banning their sale.
Sales of illegally imported machines such as the Wii, Xbox 360, PS3 and PS3 reached 2.48 million units last year, up 75 per cent from 2006.
While noting that piracy remains an issue, the firm's report found a 56 per cent year-to-year increase in the sale of legitimate packaged PC games during 2007.