China Expands Foreign Access to Value-Added Telecom Services

The Ministry of Industry and Information Technology (MIIT) of China recently issued the Circular on the Pilot Scheme for the Further Opening of Value-Added Telecom Services to Foreign Investment ("Circular").

by | May 1, 2024 | Policy & News

This announcement introduced a pilot project that aims to eliminate foreign ownership restrictions in select domestic value-added telecom services across four key regions—Beijing, Shanghai, Hainan, and Shenzhen. This move reflects China’s comprehensive commitment to broadening its economic openness.

The scope of value-added telecom services covered under the Circular includes:

  • Internet Data Centers (IDC)

  • Content Delivery Networks (CDN)

  • Internet Service Providers (ISP)

  • Online data processing and transaction processing services

  • Information publishing platforms and information delivery services (excluding services related to internet news, online publishing, internet radio and television, and internet cultural management)

  • Information protection and processing services

China will grant equal treatment to foreign enterprises participating in the pilot programs, thereby removing the previous 50% cap on foreign ownership in these vital sectors. The MIIT has clarified that there will be no further restrictions on ownership ratios for approved foreign entities. Notably, this is the first time MIIT has allowed full foreign ownership in the IDC and its related internet resource collaboration services, previously unavailable to international markets except Hong Kong and Macau.

The designated Pilot Areas include:

  • Beijing’s national comprehensive demonstration zone for expanding service sector opening-up

  • Lingang New Area in the China (Shanghai) Pilot Free Trade Zone and Shanghai’s pioneer area for socialist modernization

  • Hainan Free Trade Port

  • Shenzhen’s pilot demonstration area of socialism with Chinese characteristics

The Circular states that the implementation scope of these pilot areas will be expanded as deemed necessary, with further details to be announced separately.

This pilot project aligns with China’s ongoing efforts to reduce the negative list for foreign investment, as reaffirmed by the Government Work Report in March. The plan is to remove all market access restrictions for foreign investment in manufacturing and to decrease such restrictions in service sectors, including telecommunications and healthcare.

As for the implementation timeline, MIIT has not specified an exact date. The next steps require Beijing, Shanghai, Hainan, and Shenzhen to draft and submit their pilot implementation plans based on local conditions to MIIT for approval. Integra Group will continue to closely monitor this development and will provide timely updates on new information.

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