Overseas investment will be allowed into telecommunications sector (12/04/01)

2004-06-12 15:15

A barrier to overseas investment in Chinese telecommunications is to be eradicated with the abolition of two regulations, the Ministry of the Information Industry told China Daily.

The two regulations were issued in 1993 and 1995 and banned overseas investment in China's telecoms carriers but they will be abolished on December 11, the ministry said.

The move is in line with China's commitment to the World Trade Organization (WTO), said a ministry spokesman.

Detailed proposals have been worked out to further open the telecoms market after China's accession to the WTO. Companies can get further information from the ministry, said a senior official.

As the world's fastest developing telecoms market, China has become a priority target of telecoms carriers throughout the world.

Due to the regulations, overseas capital could previously only invest in domestic telecoms operators in a roundabout way.

For example, buying public listed stocks became the only gateway for foreign companies.

China Mobile and China Unicom, the country's two public listed mobile carriers, have been targeted by overseas investors.

The world's major telecoms carriers have all launched subsidiaries or representative offices in China.

A manager at South Korea's SK Telecom said: "We are researching the market and preparing for the opening-up.''

Vodafone has bought 2 per cent of the shares in China Mobile and recently opened its China branch in Beijing.

Christopher Gent, the Vodafone chief executive, said: "The opening of our branch company demonstrates our realization of the potential of the Chinese mobile market as well as our commitment to our partnership with China Mobile.''

However, experts believe that the abolition of the two regulations is unlikely to lead to an overwhelming flow of overseas investment because the country's telecoms regulations are still not clear enough.

The most important regulation for the sector is the Telecoms Regulation issued in September 2000. But this is already out of date,, according to Zhang Xinzhu, a researcher at the Chinese Academy of Social Sciences.

Zhang noted that, although China has the world's biggest telecoms market, the country still has no telecoms law. He said a clear and stable regulatory environment would help attract more overseas investors.