The internet of things market in China reached more than 1 trillion yuan ($146 billion) last year, and is expected to maintain rapid growth in the next few years, a report has found.

IoT, the connection of various electronic devices to the internet via technologies such as wireless sensor networks, has enjoyed a compound annual growth of more than 25 percent from 2009 to 2017, and the IoT cloud platform has become the key to fierce competition in the field, according to a report released on Friday by the China Economic Information Service.

The report, titled the Annual IoT Industry Development Report of China, estimated that the nation's IoT market will hit 1.5 trillion yuan by the end of this year.

"Fueled by the government's supportive policies, forward-thinking domestic internet and tech titans, the country's IoT sector has actually entered a new stage of rapid development over the past year," Cao Wenzhong, vice-president of the China Economic Information Service, told a news conference in Wuxi, Jiangsu province.

The study noted that the nation has seen booming industrial application of IoT. Large-scale IoT testing has been gradually conducted in fields such as transportation, logistics, environmental protection, healthcare, security and electricity. Smart cities, the industrial IoT, internet of vehicles and the smart home have emerged as the major four market segments.

With the evolving smart recognition, sensors, blockchain and other new IoT-related technologies, IoT products are developing toward the smart, convenient and low-power consumption direction, the report said.

"There are still challenges ahead," Cao added. "More efforts should be made to increase investment in IoT research and development, give impetus to the transformation and upgrading of companies, actively participate in the international standard-making process and focus on security as well."

Leading consultancy firm Gartner Inc estimated that 8.4 billion connected devices were in use globally in 2017, with a 31 percent increase year-on-year. And the number will surge to 20.4 billion by 2020. And China, the world's largest manufacturing powerhouse of electronics, has become a key player to drive the use of connected things.

Last year, the Ministry of Industry and Information Technology unveiled a plan to boost the development of IoT. The ministry set the goal of enabling more than 1.7 billion public machine-to-machine connections by 2020, with an IoT market size of more than 1.5 trillion yuan.