Reflecting China's WTO commitments, the Telecom FDI Regulations only allow for two kinds of FDI options: minority share joint ventures and equal share joint ventures. For "basic telecom business"(excluding wireless paging business), foreign investment can own a maximum of 49% of final maximum amount of shares. As to "value-added telecom business"(including wireless paging business), foreign investors may hold up to 50% of the final maximum amount of shares.
As agreed in China's WTO commitments, the maximum foreign shares in basic business sectors increases from 25% in 2003 to 49% in 2006, and that is why the phrase "final maximum amount of shares" is used. Foreign investments in the value-added business sectors can operate in Guangzhou, Shanghai, and Beijing, while owning up to 30% of the total shares. One year after accession, service areas will to include 14 more cities and 49% of total shares. Two years after accession, foreign equity will be permitted to increase to 50%, and geographical restrictions will be eliminated.
The phasing out of geographic and majority shares restrictions is not expressed in the Telecom Regulations, or in the Telecom FDI Regulation, which indirectly covers the issue by stating that "the proportions of shares held by Chinese and foreign investors in different phases shall be determined by MII as per relevant rules."
