Introduction

As in many developing countries, the telecommunications services sector in China has for a long time been monopolized by the state through the Ministry of Post and Telecommunication (MPT). Established in 1949, the MPT is not only the regulator of telecommunications services, but also the sole owner and operator. Not surprisingly, such monopoly has resulted in the slow growth of the sector. However, such slow growth did not cause major problems in the first thirty years following the founding of the People’s Republic of China because there was little mobility among the population, thus little need for long-distance communication. During this period, the telephone was an exclusive luxury available mostly to the government and the military.

As the country started its economic reform in 1979, however, the telecommunications sector started to drag economic growth down. To solve the problem, the Central Committee of the Communist Party of China and State Council issued two directives in 1984 to encourage the development of the telecommunications sector. Recognizing the special importance of telecommunications in the economy, these two directives made the development of the sector a priority, and launched the first of the many waves of reforms to come. Together, these reforms have transformed China, in a mere two decades, from a country with one-tenth of the world’s average telephone density (teledensity) level into a country with the highest number of telecommunications networks and subscribers in the world.