The Ministry of Industry and Information Technology (MIIT) of China revealed its intention to eliminate restrictions on foreign investment in certain value-added telecom services. Initially implemented in five pilot areas and later extended nationwide, this move signifies China’s commitment to further opening up its economy.
Previously, foreign investors were limited to holding a maximum 50 percent share in value-added telecom services. However, with this policy change, qualified foreign investors will be permitted to establish wholly-owned businesses in these sectors.
The decision reflects China’s efforts to align with international economic and trade standards and to allow foreign companies to participate more extensively in the nation’s economic growth while enhancing domestic services.
According to Wang Zhiqin, deputy director of the China Academy of Information and Communications Technology, this relaxation of market access for foreign enterprises will enrich product and service offerings, stimulate innovation among domestic firms, and improve both domestic services and international competitiveness, fostering higher-quality development in China’s telecom industry.
The value-added telecom services affected by the lifting of restrictions include internet data centres, content delivery networks, internet service providers, online data processors, transaction processors, information publishing platforms, and information delivery services (excluding certain sectors such as online news, publishing, radio, television, and culture management).
The pilot areas for this initiative include Beijing, Shanghai, Shenzhen, and Hainan. MIIT’s decision comes amid rapid growth in China’s digital economy and artificial intelligence sectors, where computing power is a critical infrastructure component experiencing global demand.
China’s telecom industry has witnessed significant development in recent years, with a compound annual growth rate of over 30 percent in the number of data centre racks since 2018. By the end of March 2024, 1,926 foreign-funded enterprises had received approval to operate telecommunications businesses in China.
This move aligns with China’s broader strategy of opening up its economy, as Vice Minister of Commerce Guo Tingting announced at the China Development Forum 2024 that all market access restrictions in the manufacturing sector for foreign investors will be lifted. Additionally, sectors like telecommunications and medical care will see further opening up to create more trade and investment opportunities.
As China continues to optimise services and ensure national treatment for foreign-funded enterprises, the country aims to attract more investment and bolster its position as a global economic powerhouse.
