China scraps ownership caps on some telecoms services, courting foreign capital resurgence

China has designated areas where limits on foreign investment for select telecommunications services will be lifted, with the cities of Beijing, Shanghai, Shenzhen and the island province of Hainan acting as testing grounds for an oft-cited goal to open the bedrock industry to overseas capital.

These regions will “adopt internationally recognised economic and trade practices and optimise the business environment for foreign firms”, the Ministry of Industry and Information Technology (MIIT) said on Wednesday.

“We will share the dividends of China’s digital economic development with the world.”

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Foreign ownership caps will be scrapped for businesses involved in several varieties of telecoms services, including data centres, content distribution, internet access, online data and transaction processing as well as information release, delivery and protection.

However, online news publishing, online audiovisual services and internet cultural services are still off-limits to foreign investors seeking full ownership.

The ministry said aside from internet access services – where the four enumerated regions will be the only ones where overseas players are given free rein – foreign telecoms operators can offer services covered in the new regulations to clients across the country.

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Governments in Beijing, Shanghai, Shenzhen and Hainan will need to draft their own implementation plans subject to the assessment and approval of the MIIT, and the ministry will summarise best practices – including national treatment standards for foreign firms – to be used in a potential wider roll-out if the trial period is successful.

Foreign telecoms operators will still need to secure ministry approval and will be subject to oversight from authorities, said the MIIT in its announcement.

Beijing first removed foreign investment restrictions on three categories of telecoms services – domestic multiparty communications, storage and forwarding and call centres – in 2019. The commerce ministry promised a further loosening the following year, and the rules governing foreign telecoms firms were updated in 2022.

President Xi Jinping listed telecoms services as a tertiary sector to be opened to foreign investment in his address at the China International Fair for Trade in Services in September, an imperative reaffirmed at December’s central economic work conference and during Premier Li Qiang’s government work report delivered at the national parliamentary sessions in March.