Bill Gates, the billionaire founder of Microsoft, took the rare step of standing up for arch-rival Google today as he argued that state censorship was no reason for technology companies not to do business in China.

The richest man in the world told delegates at the World Economic Forum in Davos that he thought the internet "is contributing to Chinese political engagement" as "access to the outside world is preventing more censorship".

All three of largest internet companies - Google, Microsoft and Yahoo - have been fiercely criticised by human rights groups for toeing China's line on restrictions of free speech.

This week, Google created controversy when it entered the Chinese market on Beijing's terms. Writing on Times Online today, Irene Khan, the secretary-general of Amnesty International, said that Google had "reinforced the trend in the IT industry of kowtowing to Chinese demands of censorship".

She said: "Last year, Yahoo provided the Chinese with details leading to the arrest and sentencing of a journalist; Microsoft has barred a blog critical of the government and launched a portal blocking the use of words such as 'freedom' and 'democracy'. Now Google has weeded out websites that China does not like."

Reporters Without Borders has called China the "world champion" of internet censorship. The press freedom organisation has claimed that China's so-called "Great Firewall", a sophisticated filter used to block sites, is largely powered by technology bought from American hardware companies.

However, Mr Gates argued today that freedom of information is available in China, despite sites discussing issues such as Tiananmen Square and Taiwan being blocked.

"I do think information flow is happening in China ... saying that even by existing there contributions to a national dialogue have taken place. There’s no doubt in my mind that’s been a huge plus."

Mr Gates also highlighted the attractions of China as a market. The country is set to become the biggest user of broadband in the world. Mr Gates said that "no one will catch up [except] maybe India in 50 years".

He added that despite the disparity between China’s urban and rural areas, the country was on track toward reducing poverty, a move that would mean more people would be able to afford broadband internet access.

"The greatest surprise in poverty reduction ... is China," he said.

China’s internet population, already the world’s second largest after the United States, rose to 111 million in 2005, according to the official China Internet Network Information Centre.

Earlier this month, the agency said the number of people with broadband internet access rose by more than 50 per cent compared with 2004, to 64 million.

Software piracy is a problem that will likely be solved over time, because as Chinese-made technology evolves, the country’s respect for intellectual property rights will improve, he added.

"We are always upset that they aren’t paying us for our products, but we’re not going to pick up and go home," Mr Gates said.

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