China's Internet industry will see more innovation, domestic demand and fiercer competition in the coming years after a series of M&A deals stirred the world's top Web market in the past seven months, industry insiders said on Tuesday.

At the same time, the government is trying to build a sound ecosystem for the rapidly expanding industry, said Shang Bing, vice-minister of the Ministry of Industry and Information Technology, the regulator of the country's Internet market.

"The nation did a good job in upgrading broadband Internet infrastructures and supporting the development of Web-based services last year," said Shang, adding that the preparation of legislation for the Internet industry is seeing healthy progress.