CHINA'S software piracy rate has fallen sharply as Chinese firms are increasingly using authorized software due to awareness and enhanced intellectual property rights protection, industry officials and regulators said at a forum yesterday.

Chinese firms are also boosting spending on information technology security, they said during the Shanghai IT Security Forum for Finance Industry.

China's piracy software rate, which the West often complains about, have dropped dramatically thanks to the awareness of using authorized software and an improved intellectual property rights protection environment, the forum was told.

The unauthorized software installation rate, which includes piracy, tumbled from 66 percent in 2005 to 45 percent in 2009, said Luo Yizhi, Ernst & Young's telecommunications and technology industry partner, citing figures from Beijing-based research firm Chinalabs.

"The protection of IPR represents a city's investment environment level. Therefore, Shanghai firms should pay more attention on software asset management," said Cai Jiwan, deputy director of the Shanghai Copyright Bureau.

Every two percent drop in the piracy software rate will boost the output of the entire industry by US$2 billion to US$3 billion and create 50,000 new jobs, according to Ernst & Young.

Meanwhile 92 percent of Chinese firms will spend more on IT security next year, PricewaterhouseCoopers said in a study released yesterday.

"It has become a 'flavor of the year' for IT security and the study reveals that information security is a priority for Chinese organizations," said Charlie Fu, partner of PwC risk & controls solutions.