China to hit 1B mobile subs next year

An Apple store in China.

We get terribly excited that the U.S. will have more smartphones than feature phones later this year, but for real excitement and mobile madness, China is on track to surpass a billion mobile connections by May of 2012. That’s one billion. For comparison, the U.S. has about 303 million mobile connections. According to the latest Wireless Intelligence forecasts, China is already the world’s largest mobile market, surpassing 900 million connections last quarter. In the next twelve months it will add 100 million more to hit an even bigger, rounder number.

The analyst group estimates that by the time the 1 billion milestone is reached Chinese mobile penetration will stand at 74 percent, suggesting that the market will still have plenty of room for future growth. Surprisingly, most of those connections will be on older 2G technologies with only about a quarter of those connections being 3G. This isn’t as drama-inducing as it would be here thanks to China’s relatively low penetration of smartphones. The firm estimates only one in ten Chinese have a smartphone, although the “gray market” in smartphones makes that number hard to track.

Still, that 1 billion number is surely a glittering oasis for handset vendors like Apple (s aapl). The Chinese who can afford it seem to like their luxury brands, and China Mobile, for example, says it already has 5.6 million iPhone users on its network, even though the devices can only currently use the operator’s 2G network and the iPhone is not sold by the operator. No wonder Apple is so keen to champion China in its results from the previous quarter. There are a lot of people still buying phones and plenty of room for smartphone adoption to increase.

Apple of course will still have to battle Android (s goog) in China, or Android-like phones. China Mobile has an Android-based smartphone platform called OPhone, and China Unicom has a similar platform known as the Wophone. Android-based smartphones accounted for 35 percent of China Unicom’s 3G device sales in the first quarter, and there are more options coming for price-conscious smartphone consumers in China thanks to the Android OS.

However, China will not leap to LTE and 4G until about 2014, according to the analyst firm. From its report:

There are signs that Chinese regulators are postponing the launch of next-generation 4G/LTE networks while they wait for 3G to reach maturity. China Mobile has been extensively testing TD-LTE and is eyeing commercial launch next year, but recent signals from MIIT suggest the market leader may need to delay launch until 2014. Unicom and China Telecom are expected to use the more common FDD variant of the technology (LTE-FDD) but are also considered unlikely to commercially launch prior to 2014. A recent Wireless Intelligence study forecast that only around 5 percent of the Chinese mobile user base will have migrated to LTE networks by 2015, though the sheer size of the market means it will still account for almost half of the Asia Pacific region’s LTE connections by this point.

Still, with 3G growing like gangbusters and low smartphone penetration, it doesn’t look like China’s operators need that 4G boost just yet.