With government efforts to establish a service fund on telecom development, China is expectedto link all households by telephone, including its vast rural areas, by 2020, the Ministry of Information Industry has said.

By July of 2004, 90 percent of Chinese villages has been connected by telephones, and the connection ratio will shoot up to95 percent next year, according to latest statistics released by the ministry.

The government scheme of the service fund is aimed at providingbasic telecommunications services to all at affordable prices.

China ranks No.1 in the number of telephone subscribers with 295.488 million fixed line telephone users and 305.283 million cell phone users.

In the first seven months of this year, 68.071 million households added telephones, with 32.741 million adding fixed lines and 35.33 million adding cell phones.

However, the ministry said that telecom development remains seriously imbalanced between the country's coastal areas, where 77percent households own one fixed line telephone, and the hinterland, where only 40 percent families have one.