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New Drafts to Lure Global Participations in IT
Approval of China's Draft Regulations on Telecommunications of the People's Republic of China along with the Draft Regulations on Internet Contents Services by the State Council were hailed as a right track that China is now treading, analysts said.
Passed at the 31st standing committee of the State Council on Wednesday, the new draft regulations will unveil a new era for Chinese's telecommunications and Internet industry, they said.
It means China will for the first time allow private companies to operate Internet and other value-added telecommunications services legally.
The regulations on telecom are set to regulate market order, safeguard the legitimate rights of customers and telecom operators, ensure the security of Internet network, and enable a sound development of telecom industry in China, according to Premier Zhu Rongji.
As for the regulations on Internet content services, they are set to prevent harmful information from spreading on the Internet, particularly, materials that jeopardize state security, social stability and public order.
However, there are now scant details on the Internet content rules and both regulations are still subject to revisions, sources said.
But the draft telecom regulation marks a step toward fortifying the Internet sector and stirring up competition by allowing private domestic firms to participate, analysts said.
According to Patrick Horgan, telecom director at APCO China, a consultancy based in Beijing, private capital has had a rocky history in China until now.
"It's definitely a signal that things are moving in the right direction," he was quoted by the Reuters.
It has long been considered a tough task for private companies to land a license to get involved in China's telecommunications and Internet industry.
Ministry of Information Industry are now responsible for the license issuing.
According to the draft submitted to the State Council in June, fixed-line and mobile phone companies, as well as companies that operate Internet infrastructure, should remain in the hands of the state.
Privately-owned companies can get involved in the several services including information and other related services provided over the Internet and multimedia networks, paging, value-added telecom services, and the "reselling" of traditional telecom services.
The rules, however, are not entirely rosy for private firms, analysts said.
For starters, companies must provide a feasibility study to the government and meet related requirements, the rules state.
Draft rules on foreign investment remains to be a hot issue and attract far more controversial that apparently has not yet passed the State Council.
The draft sets restrictions on who can participate in mobile and fixed-line phone companies, currently off-limits to foreign investors.
While the document's conditions for foreign participation in the Internet are more lenient, they require investments to be in the form of joint ventures with a Chinese partner that has annual revenues of $241,600.
Almost none of China's major Web sites began as Chinese companies with pre-existing revenues, and all depend mainly on foreign investment to survive.
As a condition of entry to the WTO, China has pledged to allow 30 percent foreign stakes in Internet, paging and other value-added services upon accession, rising to 49 percent after one year and 50 percent after two years.
But most Web start-ups in China have upwards of 90 percent foreign capital. They have survived through loopholes and slack enforcement. (Source: chinadaily.com.cn)
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