Business Week had a recent story on China’s growing Internet – it will soon be No. 1 in Web users.

China’s Internet is booming. More than 22 million newbies piled on to the Web last year, bringing the total number of Chinese online to 80 million. That makes China second only to the U.S. in Internet subscribers — and the Middle Kingdom won’t remain No. 2 for long. By 2006, it is expected to overtake the U.S., with 153 million Chinese online, estimates investment bank Piper Jaffray & Co. The surge is being driven by several factors, including a strong economy that’s letting people buy PCs and the opportunity the Net provides to skirt China’s tight government censorship.

So far, the Internet has been dominated by a single country — the U.S. Now, China has the potential to become the second major power of the Digital Age. By 2006, it is expected to have more people on the Net, more broadband subscribers, and more mobile-phone customers than any nation on earth. “To have 300 million people in China use the Internet is a tiny issue,” says Jack Ma, Alibaba’s founder and CEO.

You won’t need to speak Mandarin to surf the Web. But important innovations will emerge from the country, especially in markets like Net services for mobile phones and online gaming. Foreign companies that want to be dominant Net players — think eBay and Amazon — will need to have a presence in this market. And high-tech multinationals will have to consider China not just when they’re selling products but when they’re designing them, too.

China’s digital infrastructure is being built up rapidly. This is one area where India lags – but hopefully not for too long. Both India and China have the potential to take the best innovations of the Internet and leverage them to build better businesses.

India’s Missing Software

Thomas Friedman writes in his continuing series on India:

While India has the hardware of democracy free elections it still lacks a lot of the software decent, responsive, transparent local government. While China has none of the hardware of democracy, in the form of free elections, its institutions have been better at building infrastructure and services for China’s people and foreign investors.

Few people in India with energy and smarts would think of going into politics. People don’t expect or demand much from their representatives and therefore they are not interested in paying them much in taxes, so most local governments are starved of both revenues and talent.

America’s greatest competitive advantages are the flexibility of its economy and the quality of its infrastructure, rule of law and regulatory institutions. Knowledge workers are mobile and they like to live in nice, stable places. My hope is that the knowledge workers now spearheading India’s economic revolution will feel compelled to spearhead a political revolution.

It has taken a person like Friedman to help us understand ourselves better. The point he makes is very true. And perhaps, there may be a change happening in Indian politics – as the focus starts shifting to developmental issues. If Indians can start electing the right people to power, and they can focus on building the right physicial infrastructure, Indian entrepreneurship can take care of the rest.