China's on-line transactions are expected to reach one trillion yuan this year, a sharp rise from last year's 700 billion yuan, People’s Daily reported, citing a report released on July 18.   China's e-commerce transaction volume has grown by 50-60 percent over the past couple of years and is expected to maintain fast growth for several years to come, said the report released by China Center for Information Industry Development Consulting (CCID Consulting).   According to the report, over three million small and medium-sized companies will choose on-line transactions and their investment in e-commerce will rise by 35 percent annually to 100 billion yuan by 2010.   Despite the great potential, CCID Consulting president, Huang Yong, warned that China's e-commerce still faces challenges stemming from a lack of policies and a credit system, said the paper.