The Chinese Academy of Social Sciences said there were were 41% fewer websites at the end of 2010 than a year earlier.
Chinese officials have tightened regulations on the internet in recent years, and they launched a crackdown on pornography websites in 2009.
The academy's researcher said there was no link, insisting China had a 'high level of freedom of online speech'.
Liu Ruisheng said that despite the declining number of sites, the number of web pages had risen to 60 billion during 2010 - a 79% increase on the previous year.
Comment: It should be interesting to see how well this works. There's lot of talent in China--and much of it looks for ways around official censorship.