ssue: Asia-Pacific III 2001

Article no.: 13
Topic: Rapidly Developing China's Telecommunications Industry - In the Reform P
rocess
Author: H.E. Wu Jichuan
Title: Minister of Information Industry

Article abstract
Wu Jichuan, The Minister of Information Industry for the People's Republic of Ch
ina, describes the processes currently at work in the unfolding of the world's s
econd largest telecommunications sector. The Honourable Minister places the trem
endous growth in scale and depth of the information industry in its wider econom
ic context. Great efforts are being made to bridge the digital divide. Competiti
on, as in many western countries, is seen as crucial in reforming the market str
uctures and developing a modern, vibrant industry.
Full Article
Since the last decade of the 20th century, the world telecommunications industry
has undergone profound changes. On the one hand, the momentous development of i
nformation technology has facilitated wide application and convergence of teleco
mmunications, computer and multi-media; on the other hand, the merger, reorganis
ation and restructuring in the telecommunications industry with world dimensions
have intensified competition. The high growth of telecommunications has been re
gistered in competition and evolution, and has forcefully propelled the prosperi
ty and development of the world economy. Along with the accelerating pace of the
economic globalisation and information networking process at the turn of the ne
w century, the development of telecommunications is faced with opportunities and
challenges that have never seen before. All the countries in the world are maki
ng active efforts to take new initiatives to energetically develop the telecommu
nications industry with the aim of promoting the informational undertakings and
strengthening the overall competitiveness of their own country. The current stat
us of reform and development of China's telecommunications In order to meet the
opportunities and challenges of the new centuries, the Chinese government has ta
ken a series of reform measures of strategic significance to the telecommunicati
ons industry in recent years. Within fewer than three years the Government has a
ccomplished the tasks of separating enterprises from government and post from te
lecommunications, reorganising industry sectors and dismantling monopoly and int
roducing competition in all the service sectors, including basic and value-added
telecommunications and information services. Following reform and reorganisatio
n, the nation-wide basic telecommunications operators have grown to seven, Inter
net and other value-added service businesses to over 3,000, and thus the pattern
of market competition has basically taken shape. In parallel with reform and re
organisation, the Chinese government also gave high priority to the legislature
work and industrial supervision of telecommunications. In 2000, Regulations of T
elecommunications of the People's Republic of China and the Administrative Metho
ds of Internet Services were promulgated, a centralised telecommunication regula
tory body was created, and the development of China's telecommunications and ind
ustrial administration were put on the track of the rule of law. With the reform
as the driving force, China's telecommunications developed steadily and rapidly
. Throughout the ninth five-year plan period, it had maintained a growth rate th
ree times faster than GDP on average yearly basis and the proportion of industri
al added value increased gradually in GDP by being one of the fastest growing in
dustries with the best economic results. The size and capacity of the telecommun
ications network expanded continuously. By the end of June this year, office exc
hange capacity of the whole country had reached 190 million lines and mobile swi
tching capacity 160 million; total telephone subscribers had grown to 270 millio
n, 160 million fixed users and 110 million mobile users. China's telecommunicati
ons network is now the second largest in the world. Currently Internet users are
over 30 million and the telephone penetration rate is up to 24.4 per hundred pe
ople. Qualitative changes have taken place in network technology and service lev
el, as represented by the transition from manual to automatic operation, analogu
e to digital technology, small to large capacity and mono- to multi-service. Opt
ical cable, digital microwave, satellite, stored and programmed control, mobile
communication, data and multimedia and other advanced technologies have been wid
ely used on the telecommunications network. Long distance communication, telepho
ne switching and mobile communication have been digitalised. The telecommunicati
ons network is migrating to a new generation of broadband multimedia information
network and overall network capability and technological level are in the front
rank in the world. The development of telecommunications has greatly promoted t
he development of the national economy and the information-boom process and has
become an essential and pillar industry to the national economy. Up till now, th
ere have been over 100 nation-wide information application systems put into use
by various state economic sectors on the basis of the telecommunication network,
covering areas such as finance, customs, fiscal and tax, foreign trade, etc., a
nd the level of regional information growth is rising. Various kinds of e-commer
ce have developed rapidly. More and more businesses are trying to put themselves
on Internet, and web-based trade volume is growing steadily. Rapid development
in distance-learning, tele-medicine, network multimedia and a host of other info
rmation applications and services has been witnessed. China's telecommunications
in the coming years The future five to ten years are a crucial period in the Ch
ina's economic development and information growth process. The Chinese governmen
t gives priority attention to the important role of the information industry, in
cluding telecommunications. In the tenth five-year plan drawn up at the beginnin
g of this year, the government pointed out that to energetically promote the dev
elopment of the national economy and social information growth is the strategic
initiative underlying the whole modernisation drive and we shall realise industr
ialisation by means of information growth with a view to achieving leap-frogging
development in social productivity. It also pointed out the need to extensively
apply information technology in all social sectors and to use digital and netwo
rk technology to modify traditional industries, in order to promote information
growth in all the areas of national economy and accelerate the development of e-
commerce. We shall strengthen the construction of modern information infrastruct
ure, develop and improve the national rapid broadband transmission network, spee
d up the development of access network, increase the utilisation of Internet and
facilitate the convergence of telecommunications, TV and computer networks. "We
shall seize firmly the opportunity presented by the world information technolog
y revolution to actively promote strategic adjustments to network structure." In
line with the overall requirements of the development of national economy in th
e tenth five period, China's telecommunications industry set the overall develop
ment goal of building up 21st century-oriented national information infrastructu
re by means of a new generation of communication and information network. We sha
ll seize firmly the opportunity presented by the world information technology re
volution to actively promote strategic adjustments to network structure. Advance
d technologies will be used to upgrade the network and evolve it into a large-ca
pacity, flexible, efficient, cost-effective, safe and reliable high-speed broadb
and information network encompassing voice, data and image service, so as to sat
isfy various social demands at all levels. We will strive towards the objective
of enabling our telecommunications network to be the largest one of the whole wo
rld in size and capacity and its technological level and service quality to reac
h a new elevation by the year 2005. At the same time, we shall energetically pro
mote the extensive application of telecommunications and network technology to e
nhance the strength of the national economic and social service. By implementing
the initiative of government, businesses and households on the web, we shall pr
omote the information growth process in an all round way, accelerate the develop
ment of e-commerce and other types of information services. These services, such
as distance learning and tele-medicine, so as to greatly increase the utilisati
on of information technology in various social sectors. China's Commitment to Br
idging the Digital Divide China is one of the most populated developing countrie
s in the world, with serious imbalance among various regions across the country
in terms of telecommunications development. A substantial digital divide exists
between China and the developed countries. Facing this challenge, the Chinese go
vernment will, apart from the above-mentioned effort to enhance the construction
of information and communication infrastructure, focus on creating market legal
conditions in favour of effective and orderly competition and making great effo
rts to develop telecommunications industry, in a bid to bridge the digital divid
e. · To foster a market structure in favour of effective competition through deepe
ning the reform; to attract and guide more investors home and abroad into the te
lecommunications market of China and speed up the formation of market-oriented e
conomy for the telecommunications industry based on the commitments for entry in
to WTO and related policies made by the Chinese Government. · To strengthen substa
ntively the role of the government as the macro guide and market regulator; to d
evelop in a timely manner the Telecom Act, other laws and regulations concerning
the foreign investment, e-commerce, information security, etc; to improve the r
ules on market entry and interconnection; to establish a rational and reasonable
telecom tariff mechanism, a universal service compensation mechanism and a reso
urce compensated utilisation mechanism, in an effort to create a favourable poli
cy environment for the sound development of the telecommunications industry. · To
further the exchange and co-operation with other countries around the world in t
he telecommunications field, make effective use of overseas state-of-art technol
ogies and advanced management experiences and give full play to the advantage ga
ined by developing later and thus being able to make use of others' latest devel
opments, in a bid to bridge the digital divide and achieve greater development f
or the telecommunications industry. Conclusion In recent years, the Chinese gove
rnment has taken a series of major reform measures to dismantle monopoly and int
roduce competition, and consequently a pattern of market competition has basical
ly taken shape. This article describes the reform and development of China's tel
ecommunications industry as well as its position and role in the economic life o
f the country. It also touches on the development trend and policy measures to b
e taken in the coming years