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U.S. High-Tech Industry Coalition on China
- American Electronics Association - Business Software Alliance -
- Computer Systems Policy Project - Computing Technology Industry Association -
- Electronic Industries Alliance - Information Technology Industry Council -
- Semiconductor Industry Association - Semiconductor Equipment & Materials International -
- Software & Information Industry Association - Telecommunications Industry Association -
- United States Information Technology Office -

Benefits to the American Telecommunications Industry
of
Permanent Normal Trade Relations with China

Telecommunications Industry Facts

The U.S. telecom industry, which includes infrastructure equipment (e.g. optical fiber), telephone and cellular equipment, satellite services, and networking equipment that ties communications devices together, is among the most successful sectors of the U.S. high-tech industry.

International trade and investment is critical to maintain American technological leadership in the global communications field.

U.S. exports to China of communications equipment grew over 900 percent from 1990-1998, making China the fastest growing IT market in Asia.

China’s market for cellular telecommunications is growing at tremendous rates. By the end of 1999, China boasted approximately 40 million cellular subscribers, bringing it closer to its target of becoming the world’s second largest cellular market with approximately 60 million subscribers. Only the U.S. cellular market is projected to be larger than China’s by the end of this year. With the market potential for 3^rd generation mobile communications also taken into consideration, China promises market opportunities for years to come.

The number of fixed line telephones in China is expected to climb to 170-180 million by 2003, up from 100 million in 2000.

Telephone use in China is expected to grow from 12 percent of households currently to 22 percent of households by 2003.

Why PNTR with China is Important

The November 15, 1999 bilateral deal between the United States and China offers U.S. telecom equipment manufacturers and service providers expanded opportunity in China’s exploding market for telecommunications.
Included in China’s concessions in the telecom sector, China agreed to open its telecom market to foreign service providers according to the following schedule:
Phase-in of foreign participation in paging/value-added services in 2 years, allowing up to 50 percent ownership by foreign investors;
Phase-in of mobile/cellular services over 5 years, allowing up to 49 percent ownership by foreign investors;
Phase-in of fixed line/international long distance services over 6 years, allowing up to 49 percent ownership by foreign investors.
In addition, China signed onto the WTO Agreement on Basic Telecommunications Services (BTA). The BTA commits participating countries to open their telecom services markets. China has committed to a set of regulatory principles (the Reference Paper), and has therefore made specific commitments to open up its telecom services markets. This includes access to the public telecom networks of incumbent suppliers under non-discriminatory terms and at cost-oriented rates. China also agreed to technology-neutral scheduling, meaning technology choices are made as commercial decisions, rather than government mandate.
China will sign onto the Information Technology Agreement (ITA), which will reduce to zero tariffs on all information technology products by a date certain. For most telecom products, tariffs will be eliminated within three years of China’s accession to the WTO.

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