China to lift foreign investment curbs in value-added telecom services

China's Industry and Information Technology Ministry said on Wednesday it will remove restrictions for foreign investment on some value-added telecom services, adding that the move will first be implemented in five pilot areas and then expanded to other cities.

Qualified foreign investors will be able to set up wholly-owned businesses in value-added telecom services after the restriction is scrapped. Previously, foreign investors could hold at most a 50-percent share in such services.

The move is China's latest push to deepen its efforts in opening up. Experts say the move indicates China is further aligning itself with high-standard international economic and trade rules, and allows foreign companies to share in China's development dividends, and at the same time improve domestic companies' services.

"China has seen rapid market scale expansion of Internet of Things platforms such as smart homes, industrial internet and internet of vehicles," said Wang Zhiqin, deputy director of the China Academy of Information and Communications Technology, adding, "Further relaxing market access of foreign enterprises can continuously enrich the supply of products and services, stimulate the innovation vitality of domestic enterprises, improve domestic companies' services and international competitiveness, and promote higher-quality development of China's Internet of Things industry.”

According to the ministry, the value-added telecom services that have lifted restrictions are internet data centers, content delivery networks and internet service providers, online data processors and transaction processors, information publishing platforms and information delivery services (excluding services related to online news, publishing, radio, television and culture management, as well as information protection and processing services).

The pilot areas are in Beijing, Shanghai, Shenzhen and Hainan, according to the ministry.

Wang said that with the quick development of the digital economy and artificial intelligence, computing power, an important form of infrastructure supporting the development of the digital economy, is now in short supply around the world. Once the restriction is lifted, it will provide more cloud computing service options for domestic enterprises, Wang added.

China's telecoms industry has developed rapidly in recent years. Data shows that since 2018, the compound annual growth rate of the number of data center racks in China has exceeded 30 percent. And China has been continuously opening to foreign investors in the telecom industry. By the end of March this year, 1,926 foreign-funded enterprises had been approved to operate telecommunications businesses in China.

China has announced it will lift all market access restrictions in the manufacturing sector for foreign investors. Vice Minister of Commerce Guo Tingting said at the China Development Forum 2024 last month that China will promote opening up sectors such as telecommunications and medical care to create more trade and investment opportunities for foreign investors.

The country will also launch a campaign to boost investment, continue to optimize services, and fully ensure national treatment for foreign-funded enterprises, Guo said.

(With input from Xinhua)