The number of China's Internet users increased by 40 million to 338 million in January-June 2009, exceeding the total U.S. population, official news agency Xinhua reported on Sunday.

About 95% of towns and cities are connected to broadband Internet, Xinhua said, citing the Ministry of Industry and Information Technology.

China has a population of over 1.3 billion people compared with the U.S. population of 307 million.

The number of broadband Internet users in China increased by 10 million in the first half of the year to 93.5 million, the agency said.

Most Chinese netizens use the Internet for news, entertainment and social networking. Online shopping is gaining popularity, as the number of shoppers jumped by 14 million in six months to 87.9 million, the agency said.

China's vast rural areas are seen as the next front for telecommunications development. The top three telecommunication operators - China Telecom, China Mobile and China Unicom - are expected to invest 280 billion Yuan ($40.9 billion) to improve 3G networks in 2009-2010, Xinhua quoted Lu Xiangdong, vice president of China Mobile, as saying.