On October 23, 2023, the Ministry of Industry and Information Technology (MIIT) of China officially launched pilot programs to expand the opening up of value-added telecommunications services in four regions. This initiative aims to align with international high-standard trade and economic rules, fostering innovative capabilities among enterprises and sharing the benefits of digital economic growth globally. Minister Jin Zhuanglong stated that this marks a new phase in the opening up of China’s telecommunications industry.
The pilot programs will initially take place in four areas: the Comprehensive Demonstration Zone for Expanding the Service Industry in Beijing, the Lingang New Area of the Shanghai Free Trade Pilot Zone, the Hainan Free Trade Port, and the Shenzhen Pilot Demonstration Area for Socialism with Chinese Characteristics.
A senior official from the MIIT’s Information and Communication Development Department emphasized that these regions would implement differentiated and staged pilot programs based on their specific development orientations and resources. The goal is to use openness to promote development, reform, and innovation, speed up the construction and application of information infrastructure, and attract foreign investment to support high-quality local economic growth.
The pilot scheme, previously announced, includes the removal of foreign equity restrictions for services such as Internet Data Centers (IDC), Content Distribution Networks (CDN), Internet Access Services (ISP), Online Data Processing and Transaction Processing, as well as Information Services—excluding some media and cultural services.
The opening of the IDC and its related “Internet Resource Coordination Business” is a key component in the development of computing power facilities. This is the first time that foreign capital, excluding investments from Hong Kong and Macau, has been allowed in this segment, representing a significant step in the telecommunications sector’s openness since China’s accession to the World Trade Organization (WTO). This move allows foreign enterprises to participate more extensively in China’s computing power and cloud services markets.
Wang Zhiqin, Vice President of the China Academy of Information and Communications Technology, noted in an interview that computing power is currently a strategically scarce resource and a core infrastructure for supporting the digital economy. The opening of the IDC business to foreign investment is likely to attract more foreign enterprises to increase their investments in computing facilities in China and to share in the growth of the computing power market.
Yu Xiaohui, President of the China Academy of Information and Communications Technology, believes that easing market access for telecommunications services and improving oversight will help the pilot regions align more closely with international standards in regulations, management, and oversight systems.
Historically, China has gradually expanded the scope of its telecommunications industry and reduced barriers to foreign investment. When China joined the WTO, it committed to opening four out of ten value-added telecommunications services, and this has now been expanded to eight services, with foreign equity restrictions lifted for four of these.
As of September 2024, the number of foreign companies authorized to operate telecommunications services in China has risen to 2,220, with several international brands investing in this sector.
Once the pilot programs are officially launched in these four regions, they will begin accepting applications for value-added business pilot programs. Foreign enterprises can apply for approvals, and once granted, they can start substantive operations in the respective free trade zones.
Zhang Hongtao, Deputy Director of the Shanghai Economic and Information Committee, mentioned that among the companies that have pre-filled application forms are notable foreign enterprises such as Tok, HSBC, Siemens Digital Healthcare, Tesla, Liepin, Qindarui, Yili Interconnect, Unity, and ProLogis, among others.
The MIIT representative indicated that they will introduce additional policies in due course. These policies will be refined based on the results of the pilot programs to align with international high standard trade and economic rules, continuously optimize the business environment in the telecommunications sector, and expand the scope of pilot regions timely.