[irv]

wikipedia describes the situation here [0], but i think in general "literate" has a specific meaning here, that you need to know x amount of characters. Some cursory googling leads me to believe the rate for urban dwellers is 2000 characters, but for rural it's only 1500. According to a UNESCO study a few years ago, "11% of the world’s 800 million illiterate adults live in China."

I know it's comparing apples to oranges, but some of my friends in Hong Kong are perfectly fluent in Cantonese and Mandarin but really, really struggle with reading and writing.

[0] http://en.wikipedia.org/wiki/Written_Chinese#Literacy