China's telecommunications policy and Hong Kong, 1997: Bargaining positions

Telecommunications Policy

Volumn 20, Issue 9, 1996, Pages 685-698

  Lovelock, Peter ^a  

^a UNIVERSITY OF HONG KONG   (Hong Kong)

Author keywords

[No Author keywords available]

Indexed keywords

INDUSTRIAL MANAGEMENT; PUBLIC POLICY; TELECOMMUNICATION SERVICES;

TELECOMMUNICATIONS DEVELOPMENT OBJECTIVES; TELECOMMUNICATIONS POLICY;

TELECOMMUNICATION CONTROL;

EID: 0030284301     PISSN: 03085961     EISSN: None     Source Type: Journal    
DOI: 10.1016/S0308-5961(96)00049-3     Document Type: Article

References (40)

1. China United Telecommunications (known also as Unicom, or Liantong in Chinese) was set up in July 1994 with the intention of offering long-distance data communications to compete with the MPT. Unicom began formal operation in July 1995 with four mobile GSM systems in China's major cities, Beijing, Shanghai, Guangzhou and Tianjin.
2. While China's telecommunications network is now said to consist of public and private networks, it needs to be recognized that the use of the terms 'public' and 'private' is different in China from elsewhere. Both public and private networks are owned by the State or the public. Private networks are simply those not operated under the MPT. Public networks are those run by the MPT.
3. See the World Bank's discussion of these models: Wellenius, B and Stern, P Implementing Reforms in the Telecommunications Sector: Lessons from Experience World Bank, Washington, DC (1994).
4. Established in 1993, OFTA is modelled along the lines of OFTEL in Britain and AUSTEL in Australia. The Office is headed by a Director-General who reports to the Secretary of the Economic Services Branch (ESB) of the government.
5. See Arena, A 'Hong Kong Telecommunications' Paper delivered at the Telecommunications Summit 1995, Hilton Hotel, Manila, November 1995. As part of the 1990 Basic Law, any construction project undertaken by Hong Kong which 'straddle' the 1997 transition must be ratified by the Chinese government. A special commission, the Joint Liaison Group (JLG) was established to deal with such issues. The initial PCS licences were expected to be awarded by OFTA in August 1995, however Chinese authorities complained about the lack of consultation, stating that their belief was that the optimal number of PCS licences in the Hong Kong market was only four. As of April 1996, neither the PCS nor CAS licenses had made it for official review before the JLG.
6. This is up from 43 Internet service providers in November 1995.
7. A self-provide licence is issued to authorize the establishment and operation of a telecommunications system within Hong Kong. The licence is issued by the Telecommunications Authority under the Telecommunications Ordinance 1995, and is issued in accordance with Paragraph L of the first schedule.
8. Mueller, M 'One country, two systems: what will 1997 mean in telecommunications' Telecommunications Policy 1994 18 (3) 243-253. See also Ure, J 'Telecommunications, with Chinese characteristics' Telecommunications Policy 1994 18 (3) 182-194, for a discussion of Chinese developments.
9. Mueller, M 'One country, two systems: what will 1997 mean in telecommunications' Telecommunications Policy 1994 18 (3) 243-253. See also Ure, J 'Telecommunications, with Chinese characteristics' Telecommunications Policy 1994 18 (3) 182-194, for a discussion of Chinese developments.
10. Mueller, Ibid p 249.
11. Kamman, A 'Hong Kong after 1997: the effect of telecommunications service' Pacific Telecommunications Council Conference (1996) 495-504.
12. Ure, J 'Telecommunications: Hong Kong and China after 1997' In Cheng, J and Lo, S (eds) From Colony to SAR: Hong Kong's Challenge Ahead Chinese University Press, Hong Kong (1995). The China International Trade & Investment Corporation (CITIC), often referred to as Beijing's main arm for overseas investments, already has a 12.5% stake in Hong Kong Telecom.
13. See 'Joint venturing in China's telecommunications' Background Briefing Paper, Telecommunications Info Technology Forum, Mandarin Hotel, January 1996.
14. Hastings, R The Politics of Economic Reform in China: the Special Economic Zone Experiment, 1979-90, M.Phil Thesis, University of Sydney (1991).
15. Tang, X and Zhao, Y (eds) Zhongguo Kou'an Gailan (Survey of Ports in China) Economic Management Publishing House, Beijing (1992).
16. In 1987, nine major cities were on a "separate list of core cities" (zhongxin chengshi danlie): Guangzhou, Shenyang, Chongqing, Dalian, Harbin, Xian, Qingdao, Wuhan and Ningbo. Gong Ting and Chen Feng note that their listing has provided these cities with "the same economic management authority held by provinces, and, therefore, are no longer subject to economic interference from their respective provinces." See Gong, T and Chen, F 'Institutional reorganization and its impact on decentralization' in Jia, H and Lin, Z (eds) Changing Central-Local Relations in China: Reform and State Capacity p. 74 Westview Press, Boulder (1994).
17. See Womack, B and Zhao, G 'The many worlds of China's provinces: foreign trade and diversification' in Goodman, D and Segal, G (eds) China Deconstructs: Politics, Trade and Regionalism Routledge, London (1994). See also Hua, S 'Regional inequality variations and Central Government policy, 1978-1988' in Jia, H and Lin, Z (eds), op cit..
18. See Womack, B and Zhao, G 'The many worlds of China's provinces: foreign trade and diversification' in Goodman, D and Segal, G (eds) China Deconstructs: Politics, Trade and Regionalism Routledge, London (1994). See also Hua, S 'Regional inequality variations and Central Government policy, 1978-1988' in Jia, H and Lin, Z (eds), op cit..
19. Zhongguo Youdian Tongzin Shiye 1994 Nianxu Nianbao (China Posts & Telecommunications 1994 Annual Report) People's P&T Publishing House, Beijing (1994) 17-18.
20. Students of China's IT roll-out, known somewhat euphemistically as the 'Three Goldens', will recognize the justification for the huge State expenditure currently being deployed.
21. Personal interviews, Department of Planning and Importing (Guihua Yinjin Chu), Division of Finance (Jicai Chu), Division of Capital Construction (Jiben Jianshi Chu) Shanghai PTA, Shanghai, 28-30 November 1993.
22. Cross-provincial projects remain the jurisdiction of the MPT; provincial projects are the responsibility of the PTA.
23. 'Work unit' is translated from the Chinese danwei. Danwei, however, encompasses more than simply the corporation or organization that an individual works for, in that there is a social welfare obligation built in, including subsidized housing, medical and educational benefits. There are also fairly strict limitations placed on the individual in moving beyond his or her work unit.
24. Or, as they put it, "the money in our pockets". Personal interview, General Affairs and Planning Departments, Guangxi PTA, Nanning, 22 February 1995.
25. Note that the exchange rate here differs substantially from that used for comparative purposes in Table 1. The exchange rate at 1 December 1993 was US$1=Rmb0.174. The Chinese currency, the Renminbi, was allowed to substantially devalue against the US dollar in late 1994 as part of a package of reform measures to open the economy and address fiscal imbalance.
26. Although Unicom only began operation in July 1995 with four mobile networks in Beijing, Shanghai, Tianjin and Guangzhou (footnote 2), they had already established 29 other offices across the country in preparation for their next cycle of business operations.
27. This would also allow them to further their interests in northern Vietnam where, ironically, they already have good relations. Personal interview, General Affairs and Planning Departments, Guangxi PTA, Nanning, 22 February 1995.
28. This is usually conducted through Chinese subsidiary companies based in Hong Kong, a point which Hong Kong authorities could use to their advantage in negotiating with the Chinese. The Chinese telecommunications industry is already using Hong Kong to get around their own regulations. Nobody wants this arrangement to end, but the ministry will do so if it feels forced to.
29. As one interviewee remarked, "Nobody in China, with the possible exception of [Vice-Premier] Zhu Rongji, has a sign on their desk saying, The buck stops here'". Personal interview, Guangzhou municipal government official, 27 February 1995.
30. Personal interview, Finance office (Jicai Chu), Guiyang PTA, 22 January 1995.
31. Bargaining models have been applied to China elsewhere, see for example Lampton, D 'A plum for a peach: bargaining, interest and bureaucratic politics in China' in Lieberthal, K and Lampton, D (eds) Bureaucracy, Politics and Decision Making in Post-Mao China University of California Press, Berkeley (1994); Shirk, S 'The acquisition of foreign technology in China: the bargaining game' Paper presented to the 17th Pacific Trade and Development Conference, Bali, Indonesia, July 1988.
32. Bargaining models have been applied to China elsewhere, see for example Lampton, D 'A plum for a peach: bargaining, interest and bureaucratic politics in China' in Lieberthal, K and Lampton, D (eds) Bureaucracy, Politics and Decision Making in Post-Mao China University of California Press, Berkeley (1994); Shirk, S 'The acquisition of foreign technology in China: the bargaining game' Paper presented to the 17th Pacific Trade and Development Conference, Bali, Indonesia, July 1988.
33. See Roehrig, M Foreign Joint Ventures in Contemporary China Macmillan, London (1994).
34. The FTNS licences in Hong Kong were awarded in 1994 and began operation in 1995. The four licensees are the Hong Kong Telephone Company, New World Telecommunications Co., Hutchison Communications Ltd, and New T&T Hong Kong Ltd.
35. This last choice is proposed not in jest, but in recognition of the bargaining opponent Hong Kong will be up against.
36. Richard Solomon in analysing Chinese bargaining practices observed, "Chinese officials sometimes give the impression that agreements are never quite final. They will seek modifications of understandings when it serves their purposes, and the conclusion of one agreement is only the occasion for pressing an interlocutor for new concessions." Solomon, R Chinese Political Negotiating Behaviour RAND Corporation, December (1985).
37. See page 9. Guanxi translates literally as 'relationships', but a more correct interpretation is perhaps, 'who you know and what they owe'.
38. Eli Noam has suggested a modelling of network development and regulation wherein network development can be described as a linear progression with countries or regions identified at some point along the scale. See Noam, E The three stages of network evolution' in Noam, E, Komatsuzaki, S and Conn, D (eds) Telecommunications in the Pacific Basin: An Evolutionary Approach Oxford University Press, Oxford (1994). What is interesting from this perspective is that Hong Kong is about to move from (newly) developed status to developing economic status.
39. Guangdong was itself substantially ahead of second-ranked Jiangsu who had a turnover of Rmb5.3 billion (US$0.6 billion). Total turnover for telecommunications as reported by the MPT was Rmb69.31 billion (US$8.3 billion).
40. In March 1996, the initially proposed commercial launch of the VoD service for June 1996 was delayed one year.