|Asia-Pacific III 2001
|Rapidly Developing China’s Telecommunications Industry – In the Reform Process
|H.E. Wu Jichuan
|Minister of Information Industry
Wu Jichuan, The Minister of Information Industry for the People’s Republic of China, describes the processes currently at work in the unfolding of the world’s second largest telecommunications sector. The Honourable Minister places the tremendous growth in scale and depth of the information industry in its wider economic context. Great efforts are being made to bridge the digital divide. Competition, as in many western countries, is seen as crucial in reforming the market structures and developing a modern, vibrant industry.
Since the last decade of the 20th century, the world telecommunications industry has undergone profound changes. On the one hand, the momentous development of information technology has facilitated wide application and convergence of telecommunications, computer and multi-media; on the other hand, the merger, reorganisation and restructuring in the telecommunications industry with world dimensions have intensified competition. The high growth of telecommunications has been registered in competition and evolution, and has forcefully propelled the prosperity and development of the world economy. Along with the accelerating pace of the economic globalisation and information networking process at the turn of the new century, the development of telecommunications is faced with opportunities and challenges that have never seen before. All the countries in the world are making active efforts to take new initiatives to energetically develop the telecommunications industry with the aim of promoting the informational undertakings and strengthening the overall competitiveness of their own country. The current status of reform and development of China’s telecommunications In order to meet the opportunities and challenges of the new centuries, the Chinese government has taken a series of reform measures of strategic significance to the telecommunications industry in recent years. Within fewer than three years the Government has accomplished the tasks of separating enterprises from government and post from telecommunications, reorganising industry sectors and dismantling monopoly and introducing competition in all the service sectors, including basic and value-added telecommunications and information services. Following reform and reorganisation, the nation-wide basic telecommunications operators have grown to seven, Internet 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 reorganisation, the Chinese government also gave high priority to the legislature work and industrial supervision of telecommunications. In 2000, Regulations of Telecommunications of the People’s Republic of China and the Administrative Methods of Internet Services were promulgated, a centralised telecommunication regulatory body was created, and the development of China’s telecommunications and industrial 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 three times faster than GDP on average yearly basis and the proportion of industrial added value increased gradually in GDP by being one of the fastest growing industries with the best economic results. The size and capacity of the telecommunications network expanded continuously. By the end of June this year, office exchange capacity of the whole country had reached 190 million lines and mobile switching capacity 160 million; total telephone subscribers had grown to 270 million, 160 million fixed users and 110 million mobile users. China’s telecommunications 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 people. Qualitative changes have taken place in network technology and service level, as represented by the transition from manual to automatic operation, analogue to digital technology, small to large capacity and mono- to multi-service. Optical cable, digital microwave, satellite, stored and programmed control, mobile communication, data and multimedia and other advanced technologies have been widely used on the telecommunications network. Long distance communication, telephone switching and mobile communication have been digitalised. The telecommunications 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 the 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, there 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., and the level of regional information growth is rising. Various kinds of e-commerce 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 information 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 China’s economic development and information growth process. The Chinese government gives priority attention to the important role of the information industry, including telecommunications. In the tenth five-year plan drawn up at the beginning of this year, the government pointed out that to energetically promote the development of the national economy and social information growth is the strategic initiative underlying the whole modernisation drive and we shall realise industrialisation 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 network 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 infrastructure, develop and improve the national rapid broadband transmission network, speed 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 technology revolution to actively promote strategic adjustments to network structure.” In line with the overall requirements of the development of national economy in the tenth five period, China’s telecommunications industry set the overall development goal of building up 21st century-oriented national information infrastructure by means of a new generation of communication and information network. We shall seize firmly the opportunity presented by the world information technology revolution to actively promote strategic adjustments to network structure. Advanced technologies will be used to upgrade the network and evolve it into a large-capacity, flexible, efficient, cost-effective, safe and reliable high-speed broadband information network encompassing voice, data and image service, so as to satisfy 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 world in size and capacity and its technological level and service quality to reach a new elevation by the year 2005. At the same time, we shall energetically promote the extensive application of telecommunications and network technology to enhance the strength of the national economic and social service. By implementing the initiative of government, businesses and households on the web, we shall promote the information growth process in an all round way, accelerate the development of e-commerce and other types of information services. These services, such as distance learning and tele-medicine, so as to greatly increase the utilisation of information technology in various social sectors. China’s Commitment to Bridging the Digital Divide China is one of the most populated developing countries 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 government 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 efforts to develop telecommunications industry, in a bid to bridge the digital divide. · To foster a market structure in favour of effective competition through deepening the reform; to attract and guide more investors home and abroad into the telecommunications market of China and speed up the formation of market-oriented economy for the telecommunications industry based on the commitments for entry into WTO and related policies made by the Chinese Government. · To strengthen substantively the role of the government as the macro guide and market regulator; to develop in a timely manner the Telecom Act, other laws and regulations concerning the foreign investment, e-commerce, information security, etc; to improve the rules on market entry and interconnection; to establish a rational and reasonable telecom tariff mechanism, a universal service compensation mechanism and a resource compensated utilisation mechanism, in an effort to create a favourable policy environment for the sound development of the telecommunications industry. · To further the exchange and co-operation with other countries around the world in the telecommunications field, make effective use of overseas state-of-art technologies and advanced management experiences and give full play to the advantage gained by developing later and thus being able to make use of others’ latest developments, in a bid to bridge the digital divide and achieve greater development for the telecommunications industry. Conclusion In recent years, the Chinese government has taken a series of major reform measures to dismantle monopoly and introduce competition, and consequently a pattern of market competition has basically taken shape. This article describes the reform and development of China’s telecommunications industry as well as its position and role in the economic life of the country. It also touches on the development trend and policy measures to be taken in the coming years.