Ownership caps scrapped on select telecoms services

Authorities have 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 would “adopt internationally recognised economic and trade practices and optimise the business environment for foreign firms”, the Ministry of Industry and

Information Technology (MIIT) said yesterday.

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

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 would be the only ones where overseas players were given free rein – foreign telecoms operators could offer services covered in the new regulations to clients across the country.

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

The rule change comes as Shanghai’s Lingang free-trade zone – itself part of a pilot region – launched a dedicated cross-border transfer centre to facilitate outbound data flows.

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.