Foreign investors are being encouraged to pour more of their investment into China's telecommunications industry to help accelerate its development.

"We encourage more investment into the telecommunications sector as we are moving into a critical stage since the industry is deepening its reform and telecoms equipment is upgrading," said Xi Guohua, vice-minister of the Ministry of Information Industry (MII).

To raise more funds for future development has become a major concern for the telecommunications industry, he said yesterday at the First TeleChina Investment Global Forum in Beijing.

The Chinese Government spends more than 200 billion yuan (US$24 billion) every year on telecoms investment.

And the country's four major telecom operators - China Telecom, China Mobile, China Unicom and China Netcom - have so far raised US$25.2 billion in the international market and 34.5 billion yuan (US$4.2 billion) in the domestic market.

"We should seek more ways to attract and raise more funds to further boost the industry besides going public and issuing corporate bonds," Xi said.

Analysts say they believe that with the further opening of the Chinese market as a result of China's entry into the World Trade Organization, there will be more and more foreign investment.

However, there has been only limited foreign investment penetrating the country's telecom industry at this stage.

According to the MII, there are so far 10 foreign applications for telecoms-related services. And only two foreign investors had received operating licences in China by the end of October this year.

Foreign investors are currently mainly interested in the telecoms' value-added services based on mobile, Internet and broadband.

"That does not mean foreign investors have no interest in the Chinese market," said Chen Jinqiao, director of the Chinese Academy of Telecommunications Research under the MII.

First, many are just recovering from the depression of the global telecom market in the past few years.

And second, many of the telecoms services in China are still protected from foreign involvement in line with China's commitment to the WTO.

"They are carefully studying the Chinese market and choosing the right time to cut in," Chen said.

China's telecommunications industry has witnessed dramatic development in the past decade.

MII figures showed that by the end of October this year, China had signed up 325 million mobile phone subscribers and 310 million fixed line users.

"We should not be afraid of incoming foreign investment in the sector," Chen said.

Besides competition, foreign investment will also contribute to boost the industry by introducing management experience and technologies, he said.

Chen said he believed in the coming years foreign investors will mainly focus on value-added telecoms services, mobile and Internet-related business.

The third-generation (3G) of mobile telecommunications industry, for example, will be one of the top concerns for foreign investors, he said.

In fact, many telecoms operators and equipment providers are all expecting the Chinese Government to roll out 3G licences.

Rumour has it that the Chinese Government is likely to release three 3G licences next year.

"I believe that the TD-SCDMA standard will have great potential in China," said Yu Dehai, director of the New Industry Research Department of the Research Center of the State-owned Assets Supervision and Administration Commission the State Council.

"It is very clear that the standard is favored by the Chinese Government and the standard itself is developing faster than expected. And It is favorable for investors to invest more in the TD-SCDMA system while betting on China's 3G development," Yu told China Daily yesterday.

In another development, Chen pointed out that the Chinese Government should accelerate its development of related laws and regulations to protect and attract foreign investors.

(China Daily December 16,2004)