By tf-lawyer.com On October 23, the Ministry of Industry and Information Technology (MIIT) of China announced the launch of a pilot program aimed at expanding the openness of value-added telecommunications businesses in four regions. This initiative seeks to align with international trade standards, stimulate corporate innovation, and share the benefits of the digital economy globally. MIIT Minister Jin Zhuanglong indicated that this marks a new phase in the openness of China’s telecommunications industry.
The pilot program will initially take place in four regions: Beijing’s Comprehensive Demonstration Area for Service Industry Opening, the Lingang New Area of the Shanghai Free Trade Zone, Hainan Free Trade Port, and the Shenzhen Pilot Demonstration Area for Socialism with Chinese Characteristics.
A senior official from the MIIT’s Department of Information and Communication Development addressed reporters, explaining that these regions will be able to implement open pilot initiatives in a differentiated and step-by-step manner based on their development positioning and resource advantages. The aim is to accelerate development, reform, and innovation through openness, further promoting the construction and application of information infrastructure while attracting foreign investment to foster high-quality local economic growth.
The earlier released pilot program allows for the removal of foreign ownership restrictions in several areas, including Internet data centers (IDC), content delivery networks (CDN), Internet access services (ISP), online data processing, and transaction processing. Certain exceptions apply, such as information publishing platforms and delivery services related to internet news, online publishing, and internet cultural operations.
The inclusion of Internet data centers and related “Internet resource collaboration services” in this pilot initiative represents a significant step forward, opening up to foreign capital from sources beyond Hong Kong and Macau for the first time. This marks a major move in the telecommunications sector since China’s accession to the World Trade Organization (WTO), allowing foreign enterprises to engage more deeply in China’s computing power and cloud services markets.
Wang Zhiqin, Deputy Director of the China Academy of Information and Communications Technology, shared in an interview that computing power has increasingly become a strategic resource essential for supporting the digital economy. Opening the Internet data center business to foreign investment will attract significant funding from foreign companies, enabling them to benefit from the evolving computing market in China and enhancing the country’s infrastructure in the era of intelligent technology.
Yu Xiaohui, the academy’s president, believes that by relaxing market entry for telecommunications services and refining the regulatory framework, the pilot regions will be able to align first with international standards in regulations, management, and compliance. This will help establish a regulatory and systematic framework consistent with high international trade standards.
Historically, China has gradually expanded the scope of telecom service openness and lowered barriers to foreign investment. Upon joining the WTO, China committed to opening four out of ten value-added telecommunications services, which has now expanded to eight, with the removal of foreign ownership limits on four of these services.
As of September 2024, the number of foreign enterprises authorized to operate telecommunications businesses in China has surged to 2,220, with numerous well-known international companies investing in the sector.
Following the granting of pilot program approvals in the four regions, the areas will initiate applications for value-added services. Foreign companies can apply for pilot approvals according to the set requirements, and after securing these approvals, they can begin substantive operations in the respective free trade zones.
Zhang Hongtao, Deputy Director of the Shanghai Municipal Commission of Economy and Informatization, informed reporters that several companies, including Docket, HSBC Jin Ke, Siemens Digital Healthcare, Tesla, Liepin, Qinda Rui, Yili Internet, Unity, and Prologis, have already pre-filled application forms.
An official from the MIIT’s Department of Information and Communication Development indicated that additional policies will be introduced at the appropriate time. These will continuously refine open policies based on pilot experiences, proactively align with high international trade standards, and consistently improve the business environment in the telecommunications sector, with plans to expand the pilot regions as needed.
