Foreign telecom investors are being given clear guidance for their development in China after the State Council released the Rules for Overseas Investment in the Telecom Industry on Friday.

The rules, which come into force on January 1, are the first set of stipulations for overseas investment in China's telecom industry. Operations in this key sector were previously tightly controlled by the government and direct investment from overseas companies was strictly forbidden.

In accordance with rules of the World Trade Organization, which China has joined officially, the telecom market must open to overseas companies.

The new rules provide much detailed information for overseas companies about how to invest in China's telecom industry.

They can set up joint ventures with domestic partners or directly invest in a telecom operator, the rules said.

Yet their shares in telecom operators, which are divided by the Chinese Government into basic telecom operators and value-added operators, are stipulated as below 49 and 50 percent respectively, according to the rules.

The Ministry of Information Industry (MII) said basic telecom carriers refer to those which provide fixed-line, mobile, satellite, data, international telecom services - while value-added providers can operate Internet access, e-mail, teleconference and voice mailbox.

Overseas investors should apply to the MII and other related government ministries for operation licenses, the rules stipulate.

Many foreign telecom operators said they paid close attention to the rules and are studying possibilities for co-operation with domestic partners.

"The rules mark a major move forward for the country's telecom industry," commented Kan Kaili, an industry expert with Beijing University of Post and Telecommunications.

(China Daily December 22, 2001)