China's Telecommunications Industry: Development Patterns and Policies

T n HE PAST DECADE has seen remarkable transformation and growth in China's telecommunications industry. The number of telephone subscribers in the PRC has soared from 7 million in 1990 to more than 50 million today; pager use has spread to more than 20 million people; and Internet access has expanded to include 150,000 users in 1997, with projections of 1 million subscribers by the end of the century. The rate of growth and investment in the sector has been one of the fastest of any nation in the world and has given the country sophisticated tools to fuel its economic growth. Despite the rapid development, some significant shortcomings stand to impede future progress. The government maintains a ministerial monopoly of communications services, restricts foreign investment and control and has, until recently, been slow to expand service to rural areas. Other large developing nations have shared similar problems in expanding their networks, and, unless important reform measures are further enhanced, China's own program may follow their trends and retard the sector's growth. In examining the path the Chinese have taken in fostering their telecommunications industry, the paper takes a comparative developmental approach. It considers the policy processes crafted by nations at similar economic stages and discusses the elements of their strategies that both furthered and hindered expansion of telecommunications to their populations. The body of the essay then looks at China in the light of these patterns. Have the Chinese followed typical routes, or does their socialist system facilitate a different, perhaps more efficient or egalitarian, strategy toward expansion of the sector? Which policies adopted in recent decades have been most effective? Do these policies indicate that China may be able to successfully deviate from less fruitful paths taken elsewhere in the developing world? In discussing China's telecommunications industry, this paper adds to prior literature by focusing on government policy and its implementation