An Estimation Of FDI Barriers To China’s Basic Telecommunications

The purpose of this paper is to explain why FDI has not entered China’s basic telecommarket since it entered WTO and to compare the opening status of Chinese basic telecommarket in2000and2010, by constructing a comprehensive indicator of FDI barriers inChina’s basic telecom services that incorporates both policy and non-policy factors. Thenon-policy impediments are developed with first-hand survey data. The AHP method andFuzzy Mathematics are applied to ensure the objectivity of the quantifying process.The results indicate that:(1) The opening of value-added telecom sector of Chinarevealed significant benefits since it joined WTO. The experiences of India and the UnitedStates also illustrate positive effects and feasibility of the market opening in the basic servicessector.(2) Policy impediments in China’s basic telecom sector have decreased significantly.Market competition and permitted foreign equity proportion have been improved, resulting inweaker direct impacts. However, policy impediments are still one of the key factors affectingthe opening from the perspective of its synthesize impacts.(3) Non-policies barriers areplaying an increasingly important role after the policy threshold greatly decreased, theignorance of the former will lead to the overvalue of the market openness (4) With thereducing in policy restrictions, remarkable non-policy barriers such as Investment costs andrisks’ and Psychological impediment caused by foreign equity limits’ have become the mostsignificant barriers directly influencing FDI. Lack of telecommunications law’, Discrimination in project evaluation process’, and Low level of internationalization’ havebecome subordinate FDI impediments, considerably revealing that market structure with statemonopoly feature is the key to further opening.(5) Although the policy impediments havebeen significantly reduced within the ten years after China joined WTO, the increase ofoverall openness is limited in the basic telecom sector, the main reason of which is that thereexisting important recessive barriers. According to the conclusions above, several policyimplications in further opening China’s basic telecom sector are also drawn.