Different estimates put China’s population in the neighborhood of 1.3 billion people, and soon enough, PayPal intends to start helping them do business worldwide.  PayPal will open an ecommerce hub in Chongqing with the local government’s blessing.

This won’t be a simple matter of encouraging people to use the online payment system when making purchases and accept it when making sales.  Instead, it looks like the company means to interact with merchants in a number of ways, presumably earning their respect and loyalty in the process.

According to Bloomberg, "PayPal agreed with Chongqing’s municipal government to set up the center to offer foreign exchange settlement, telesales, training, verification and other services . . ."

A PayPal spokesperson also said, "This is the first time in the world for PayPal where we are doing such a wide-ranging, comprehensive partnership with a government.  In this case, we are looking to develop the local e-commerce industry in inland China to help Chinese merchants build up their capabilities to conduct cross-border trade."

The government partnership should help ensure PayPal doesn’t encounter the same problems Google did.  Or the same problems eBay did, for that matter (eBay entered China in 2002 and quit the country in 2006).

This situation will definitely bear watching.