Some employers are blocking social networking sites over fears that employees are spending more time socializing online than they are on their jobs.
The CNNIC report said 124 million Internet users in China were using sites including Kaixin001.com and Renren.com. The document said more than half (52.4 percent) of the users were aged between 20 and 29.
Xiao Yu, 28, an employee from a Beijing-based IT company, is among the hoards who socialize online.
"I cannot leave Kaixin now," said Xiao.
Kaixin, one of the hottest networking sites in China, says it has more than 40 million users.
Xiao, who lives alone and who does not have a boyfriend, said she has lots of fun chatting online to her 300 friends. She also farms vegetables and takes care of a pet in her virtual world.
The company Xiao works for is among those that have now banned staff from using Kaixin. The prohibition was started last month because the social networking site was said to be "reducing work efficiency".
"Sometimes, I use wireless Internet access to log into Kaixin, to bypass the company's monitoring," she said.
Xiao said the first thing she does after she arrives home each day is log on to Kaixin to see if her vegetables have been stolen by online thieves.
Many other employers have tried to keep networking sites out of the workplace.
More than 500 companies have joined an "Anti-loser Union", which tries to stop employees from over-indulging in online chatting and social networking.
In October, a study commissioned by Robert Half Technology, an IT staffing and consulting firm, found 54 percent of companies in the US had banned workers from using social networking sites including Twitter, Facebook, LinkedIn and MySpace.
The study also found that 19 percent of companies allowed social networking use for business purposes only, while 16 percent allow limited personal use.
CNNIC said China now has more than 1,000 social networking sites.
The report says students number large among users (50.3 percent). White collar workers make up 31.1 percent.
Nearly 60 percent of people using the sites have a degree above the junior college level.
Some 42.4 percent of users say they visit the sites to "kill time" while 27.4 percent say they use them to play online games.
Hong Bo, an IT industry expert, said that even though the number of such online users seems to be large, there is still lots of potential for online expansion.
"Compared to foreign countries, including the US, the number of people visiting the sites is still relatively small," he said. "Most netizens are interested in traditional portals."