Statement by
H. E. Zhang Chunjiang, Vice Minister of Information Industry
People’s Republic of China

Tuesday, 19 March 2002

Thank you, Mr. Chairman. I would like to speak a few words on today’s telecom development.

First, we should have a right understanding of the readjustment in the telecom industry around the world and build confidence in telecom development and informatization. Today, the telecom and IT industry enjoys the fastest growth rates and is a most influential sector in the world. However, in the last few years, problems and setbacks arose in the industry and the world telecom community was reflecting upon them. We believe that as everything has its ups and downs, the global telecom and IT readjustment is an inevitable result that happens cyclically after more than a decade of rapid development. IT is also retuning to rational development after overheated growth. We should have a right understanding of the situation. When the networked economy is overheated, we should avoid exaggerating its role and when it runs into temporary difficulties, we should not be overwhelmed with pessimism and disappointment. Telecom, as a sunrise industry, is the cornerstone of networked economy and informatization. Having experienced the ‘labor pains’ of readjustment and skimmed off the ‘foams’, it will eventually move on in the direction of more practical and rational development. Since China has always taken a practical attitude towards telecom development, following economic laws and proceeding from our national conditions, no ups and downs have come up in this sector. Nonetheless, we need to further strengthen macro-control, planning and guidance, taking into consideration foreign experiences and lessons so as to avoid market risks and ensure the sound development of the sector.

Second, we need to attach paramount importance to the combination of technological development with the market, as the networked economy has to be established on the basis of an effective profitability model. Today, information technologies are changing each passing day, leading to diversified applications and services. In particular, the advent of the Internet and multimedia technologies have brought us into a market environment more complex than the one in the days of voice-only communications. Therefore, we can hardly overemphasize the combination of technologies with the market. The dot com companies, Internet services as well as 3G communications and broadband access must be based on the application market and content development. Only with a down-to-earth profitability model instead of concept hyping like the so-called “attention economy” and “free lunch”, can we build a networked economy full of vitality and develop new services effectively. China is promoting a strategy of promoting industrialization by means of informatization and the government has made clear its decision to speed up the application of information technologies in transforming the traditional industries and to give priority to the development of e-government and e-commerce. Thus, informatization will be implemented in a more practical and effective way. At the same time, we are conducting tests and gradually developing the market for 3G and broadband access networks.

Third, we need to fully understand that telecom is infrastructure in nature and to deal with the relationship between economic and social benefits in a proper way. Telecom is infrastructure. We develop telecom not only for direct economic benefits but also for greater efficiency in economic operation and social administration, better quality of life and maximized social benefits, through the application of telecom networks and services. For this reason, we do not favor or hold any government auction of 3G licenses. 3G license auctions at extremely high prices in some countries have proved to be one of the major reasons for the foam in telecom growth. In the end, such high prices will shift on the consumers, doing harm to the telecom sector and the whole economy. As the Chinese proverb goes, “the overturned cart ahead is a warning to the carts behind.” The developing world should learn from the past and set the cost of communication resources at a rational level so as to make telecom services affordable by the general public and facilitate the long-term development of telecom networks and services.

Fourth, we need to enhance government regulation as we liberalize the market. The developing countries should find regulation models that best suit themselves. The general trend of telecom is towards competition and liberalization, which play an indisputably positive role in vitalizing the sector and stimulating growth. However, government regulation is still unnecessary in a competitive market and the market should be opened to foreign companies in a standardized and orderly way. This is extremely important to the developing countries. In establishing a telecom regulatory system, we need to take full consideration of our own conditions rather than copy indiscriminately the experience of the developed countries. The developed countries have gained more than a hundred years of experience in developing market economy and established relatively complete legislative, administrative and judiciary systems. However, being in development stages different from those of the developed countries, most developing countries do not have those systems. Therefore, we do not think that the developing countries should copy the regulation model formed in the mature market system of the developed countries. Balance of power and functional separation between policy makers and executers are not suitable to the developing countries. We believe that the developing countries should establish a telecom regulatory system according to the principle of centralized management, independent operation and legal administration and avoid functional overlapping so as to regulate the sector in an authoritative and efficient manner. Thus, we would be able to enhance fair and effective competition and promote the rapid and sound development of the telecom sector in a liberalized market.

Thank you!