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To: DownSouth who wrote (81471)	9/25/2000 4:39:05 PM
From: Jacob Snyder	Respond to of 152472

September 25, 2000 China Pledges to Open Telecom Sector To Foreigners, but With Restrictions A WSJ.COM News Roundup BEIJING -- China's top telecommunications official pledged to be "fair" in opening the fast-growing industry to foreign investors, but warned that they will have to meet still-unspecified conditions. Minister of Information Industries Wu Jichuan disavowed specific limits on foreign investors that were included in draft rules recently circulated from the government. In June, China had drafted new regulations that would divide telecommunications companies into two types: those that own network infrastructure, such as domestic or long-distance carriers, and those that provide services on them, such as video conferencing. According to the new rules, owners of network infrastructure must be "a legally established telecom enterprise in which the state is the controlling shareholder." Among other stipulations, the draft demanded foreign investors in some telecommunications services have at least $10 billion a year in revenue. Those rules have worried some industry executives, as they appear to bar all but the world's biggest firms from the lucrative sector. The draft also left the Ministry of Information Industries as the regulatory body although it owns China Telecom, the country's former phone monopoly. In the past, China Telecom has refused to allow other companies to use its network, and the ministry was slow in forcing it to open. Denying knowledge of the draft, Mr. Wu said China will require foreign companies to meet "certain qualifications." He declined to specify what those might be, but said they will be laid out in rules issued before China enters the World Trade Organization, which is widely expected by early next year. Mr. Wu's comments follow last week's approval by China's cabinet of the nation's first set of comprehensive rules for the domestic telecom industry. While those rules require state-companies to control telecom networks, they open other areas -- including portals and other Internet content providers -- to "qualified" firms in China's private sector. The draft rules give the government agency broad leeway to decide who qualifies based on the such actions as their "ability to provide long-term services," according to a copy seen by Dow Jones Newswires. Mr. Wu said those rules, 81-articles long, will be published "very soon." However, the rules on foreign investment will have to wait longer. In addition to the $10 billion revenue floor for foreign investors in telecommunication network operations, the draft copy of those rules require foreign investors in other sectors -- like Internet content -- to have annual revenue of $500,000. They also dictate chairmen and top managers at joint ventures be chosen by local partners. Although the draft has been distributed widely among executives and officials, Mr. Wu said he was unaware of any such stipulations. Claiming that the draft might have been issued by lower-level officials, he vowed the final rules "won't be so loaded with detail and so specific." Foreign firms have long been eager to participate in China's telecommunications industry, which continues to have huge untapped potential despite dizzying growth. Mr. Wu said the country now has 65 million mobile-phone users, second only to the U.S. It has 135 million fixed-line customers, up from 100 million in 1998. However, still only 5% of the population has mobile phones and just 38% fixed-line connections. China has vowed to begin allowing foreign investment in the telecommunications sector after it joins the WTO, a concession for which the U.S. and European governments fought hard. Mr. Wu reiterated the government's pledge to be "fair" and "rational" as it follows through on its commitment to open the sector up after joining the WTO. The rules, he said, "definitely won't include anything discriminatory."