Just a week after the WTO accord between the US and China, the protectionist lobby in China is talking down the impact the agreement will have on China’s telecommunications industry. In his first clear public statement since the news of the agreement, leading protectionist Wu Jichuan, the Minister of Information Industry, said WTO membership will not dramatically impact China’s telecoms and IT industries.
In an interview with China Youth Daily, Wu said that after China gains WTO membership, the telecommunications sector in China will be open to foreign businesses. But he then said certain problems should be conscientiously studied and solved. China will continue to reinforce regulatory efforts in the telecoms industry, which could be bad news for potential investors.
It was Wu who jolted the global internet investor community last September by declaring foreign investment in China’s internet sector to be illegal, and who last year told the country’s second official carrier China Unicom to get its foreign partners to disinvest causing a furore which is still continuing. For years. Wu has also fought to protect near-monopoly China Telecom from competition from China Unicom.
Also weighing in has been Prof Zhang Hanlin, who is the secretary-general of the World Trade Organization Research Association at the University of International Business and Economics in Beijing. Also speaking to the official media, he said the agreement has been largely misrepresented in the press and, as a result, misunderstood by the public.
Saying the US side should not have published any details of the agreement at all until China has finished bilateral negotiations with all WTO members, Zhang claimed the US summary aimed to quell domestic opposition to the accord, and so details US gains and leaves out concessions made to China.
Looking at specific areas he felt had been misrepresented, Zhang said claims that
foreign businesses will be allowed to invest in all sectors of the internet market are inaccurate. This is because other WTO members who have opened their markets placed restrictions on the percentage of foreign ownership allowed. China will no doubt do the same, he said.
He said the telecoms agreement had also been misreported with media claiming foreign businesses could hold a 49% equity stake in Chinese telecom companies, a percentage that would increase to 50% in two years. To be accurate, he said, foreign businesses can possess 50% equity stakes in value-added services after two years and in paging services after three years. But he said this does not mean foreign companies can hold such stakes simultaneously, nor does it mean foreign businesses will gain control over the operation and management of these enterprises.
He also claimed the telecoms industry will be opened in stages, in line with domestic demand and according to domestic telecom services rules and laws. Foreign investors will in no way be exempt from these regulations, he said, repeating what Wu implied in his interview.
