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CONTACT: Patrick Ross
April 18, 2005
(202) 289-8928
China Must Embrace Competition
Telecom Policy Should Encourage Growth, Zielinski Says

WASHINGTON D.C. - Telecommunications reform is coming to China, but that sector's potential for rapid growth could be stymied by misguided government priorities, writes The Progress & Freedom Foundation's Richard Zielinski. In "Chinese Telecommunications Policy Examined: The Case for Reform," Zielinski says that China's entry into the World Trade Organization "offers China a rare opportunity to advance its communications capabilities," but the government must recognize that protecting its favored domestic companies and funding antiquated technology won't allow the country to benefit from everything WTO membership has to offer.

China's entrance into the WTO has "raised the stakes" for domestic companies, particularly with the government expected to issue new telecommunications rules this year. There is tremendous growth potential in the Chinese telecommunications market, given that the World Bank estimates about three-quarters of the country's 1.3 billion citizens have never made a phone call.

But Zielinski says those citizens won't be served by policies focused on government ownership and the creation of "national champions." "One concept that the Chinese government must grasp," he argues, "is that the creation of an advanced communications network is vital for economic growth overall, regardless of whether that network is indigenously owned or not."

"By placing the focus on the competitiveness of its state-owned firms, China is sacrificing both the development of a competitive domestic environment and the quality of its national communications infrastructure," writes Zielinski. By shutting out potential competitors, "the Chinese are simultaneously passing over the latest communications technology as well as the investment capital that is needed to construct state-of-the-art infrastructure."

The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its implications for public policy. It is a 501(c)(3) research & educational organization.



The Progress & Freedom Foundation