| Foreign supplies of technology and capital are important to developing nations in aiding their telecommunications development. This study assesses the effectiveness of China's policies and strategies regarding foreign investment in telecommunications since China adopted economic reforms and set priority to telecommunications sector development. It is found that foreign technology and capital have been acquired, largely on Chinese terms, and have contributed to China's telecommunications development. However, there are risks and controversies associated with the current models of technology transfer and financing that can affect all parties involved.; In the equipment market, a three-step strategy (import, joint ventures, and domestic capabilities) has been successfully implemented that resulted in a number of benefits including the development of domestic manufacturing particularly the digital switches manufacturing. On the other hand, questions are raised such as whether the stress by the Chinese government to support domestic manufacturing firms will hurt foreign investment and whether non-tariff barriers to trade in telecom equipment in China are likely to remain.; China's telecom services market has been heavily protected under political and monopoly interests and foreign direct investment has been prohibited in telecom services in China. The limited scope of foreign investment has taken two major forms: the Chinese-Chinese-Foreign financing model by Unicom, which was dismantled by government order; and the initial public offering by Chinese telecommunications operators. There are only slightest signs of strategic alliances with foreign telecom firms by Chinese operators. It is found that foreign investment in China's telecommunications has greatly contributed to the liberalization and competition of the mobile communications market.; The study also traces the evolution of policies and regulations regarding foreign investment in China's telecommunications in tandem with the process of restructuring of the telecom sector. The negotiations, commitments, and challenges of China's WTO bid are also discussed. It is recommended that China prepare its legal framework and the competitiveness of its domestic operators for the WTO entry. |
