China is set to remove restrictions on foreign investment in several value-added telecommunications services, a significant move that underscores the country’s commitment to opening up its economy. The Ministry of Industry and Information Technology announced on Wednesday that qualified foreign investors will soon be allowed to establish wholly owned businesses in specific areas of the telecom sector.
The initiative will start in five pilot regions—Beijing, Shanghai, Shenzhen, and Hainan—and is expected to expand to other cities over time. Previously, foreign investors were limited to a maximum 50 percent share in such services, but the new policy paves the way for complete foreign ownership in designated telecom services.
The value-added telecom services affected by the lifted restrictions include internet data centers, content delivery networks, internet service providers, online data processors and transaction processors, information publishing platforms, and information delivery services. However, services related to online news, publishing, radio, television, culture management, and information protection and processing remain restricted.
Industry experts view this development as a strategic step toward aligning China with high-standard international economic and trade practices. “China has experienced rapid growth in Internet of Things platforms like smart homes, industrial internet, and internet of vehicles,” said Wang Zhiqin, deputy director of the China Academy of Information and Communications Technology. “Further relaxing market access for foreign enterprises can enrich the supply of products and services, stimulate innovation within domestic companies, enhance their international competitiveness, and promote the higher-quality development of China’s Internet of Things industry.”
With the acceleration of the digital economy and advancements in artificial intelligence, global demand for computing power—a critical infrastructure component—is surging. Wang noted that lifting restrictions will provide domestic enterprises with more cloud computing service options, addressing the shortage in computing resources.
China’s telecommunications industry has witnessed rapid expansion in recent years. Data indicates that since 2018, the compound annual growth rate of data center racks in China has exceeded 30 percent. As of March this year, 1,926 foreign-funded enterprises have been approved to operate telecommunications businesses in China, reflecting the country’s ongoing efforts to open its telecom sector to foreign investment.
This policy shift is part of a broader initiative by the Chinese government to liberalize its markets. Vice Minister of Commerce Guo Tingting announced at the China Development Forum 2023 last month that China will lift all market access restrictions in the manufacturing sector for foreign investors. The country plans to further open sectors such as telecommunications and medical care, creating more trade and investment opportunities for global investors. “We will launch a campaign to boost investment, continue to optimize services, and fully ensure national treatment for foreign-funded enterprises,” Guo said.
The move not only allows foreign companies to participate more fully in China’s burgeoning digital economy but also aims to enhance the quality and competitiveness of domestic services. By fostering a more open and inclusive market environment, China seeks to stimulate innovation and sustain its economic growth in the rapidly evolving global landscape.
Reference(s):
China to lift foreign investment curbs in value-added telecom services
cgtn.com
