BEIJING-In its latest proposal to gain entry to the World Trade Organization (WTO), China offered on 24 July to open gradually its paging and mobile phone operating services to foreign competition. Currently, foreign companies only are allowed to engage in manufacturing of telecommunications equipment, but are barred from offering services.
It is the first time China agreed to open its telecom services sector, which is considered a strategic industry. Paging operations already are open to domestic competition, with thousands of companies locked in a fierce battle to win over a fast-expanding market. Mobile services are a lopsided duopoly with China Telecom occupying more than 97 percent of the market and China Unicom less than 3 percent.
Premier Zhu Rongji called on the Ministry of Information Industry to start preparations for opening up the market to foreign competition. After accession to the WTO, China will allow foreign companies a stake of up to 25 percent in joint ventures with Chinese paging operators. Five years after accession, the same rule would apply to mobile services. Value-added services also will be opened gradually, with allowed foreign stakes as high as 35 percent.
The Chinese government also has decided to concentrate further on developing its GSM (Global System for Mobile communications) network and has postponed building CDMA (Code Division Multiple Access) networks, which at present are still experimental here. CDMA systems will not be extended on a nationwide scale in the near future, disappointing many foreign companies.
China is eager to join the WTO before 2000, when further market-opening initiatives will make joining the organization even more difficult. Protracted negotiations have been going on for 11 years. While the United States and other trading partners are pleased with China’s offer to start opening the telecom services business, some countries still want to extract more concessions to help lower their burgeoning trade deficit with China.
There is general agreement that China, as a large trading country, should join the WTO, but China insists on joining as a developing country, giving it much more leeway to cut import tariffs and non-tariff trade barriers. China’s entry in the WTO also would open the door for Taiwan, which already has successfully concluded negotiations with its trading partners.
China fears that if it enters as a developed economy, its domestic companies would be unable to withstand the onslaught of foreign competition.
