1 Unless otherwise noted, the telecoms service in this study refers to “basic” service and does not include the value-added one. For the differences between basic and value-added service, see, “WTO: telecommunications services coverage,” http://www.wto.org/english/tratop_e/serv_e/telecom_e/telecom_coverage_e.htm.

2 Tsai, Kellee S., “Adaptive informal institutions and endogenous institutional change in China,” World Politics, No. 59 (2006), p. 125Google Scholar. Similar points are also raised in Mertha, Andrew C. and Zeng, Ka, “Political institutions, resistance and China's harmonization with international law,” The China Quarterly, No. 182 (2005), pp. 322, 336–37Google Scholar.

3 Yu Hui also points to the problem of few experts, lack of public law, transparency and accountability in public policy. Interview in Beijing, January 2006.

4 The director of the Research Centre for Regulation and Competition in Chinese Academy of Social Science.

5 Interview in Beijing, February 2006.

6 Ibid. Yan, Xu and Pitt, Douglas also give a similar evaluation of the 1998 reform. Chinese Telecommunications Policy (Boston, London: Artech House, INC, 2002), p. 110Google Scholar.

7 Economist specializing in infrastructure regulation in Beijing University.

8 They include Zhou Qiren in Beijing University, Yu Hui in CASS and Kan Kaili at Beijing University of Post and Telecommunications (BUPT).

9 Andrews-Speed, Philip et al. , “The ongoing reforms to China's government and state sector: the case of the energy industry,” Journal of Contemporary China, Vol. 9, No. 23 (2000)CrossRefGoogle Scholar.

10 Yang, Dali L., Remaking the Chinese Leviathan: Market Transition and the Politics of Governance in China (Stanford, CA: Stanford University Press, 2004)Google Scholar.

11 Pearson, Margaret M., “The business of governing business in China,” World Politics, No. 57 (2005)CrossRefGoogle Scholar; and “Governing the Chinese economy: regulatory reform in the service of the state,” Public Administration Review, July/August 2007. Sebastian Heilmann specifically analysed how the Leninist methods of Party personnel control have made China's regulatory innovation deficient but distinctive. “Regulatory innovation by Leninist means: Communist Party supervision in China's financial industry,” The China Quarterly, No. 181 (2005).

12 Pearson, “The business of governing business in China.”

13 See the official WTO website on the telecommunications sector, http://www.wto.org/english/tratop_e/serv_e/telecom_e/telecom_e.htm

14 Ibid. Upon entry, foreign firms may take up 50% ownership of the value-added service firms in two years, and 49% ownership in the mobile and fixed-line service in five to six years.

15 For more discussion on various barriers that China Unicom has encountered, see Yan and Pitt, Chinese Telecommunications Policy, pp. 82–83. For the pre-reform telecoms regime, see Lu, Ding, “The management of China's telecommunications industry,” Telecommunications Policy, Vol. 18, No. 3 (1994)CrossRefGoogle Scholar.

16 Interview in BUPT, December 2005.

17 Zhang, Bing and Peng, Mike W., “Telecom competition, post-WTO style,” The China Business Review, May–June 2000Google Scholar. Also see Mertha and Zeng, “Political institutions, resistance and China's harmonization with international law,” p. 323.

18 Guan, Scott Yunxiang, China's Telecommunications Reforms: From Monopoly towards Competition (New York: Nova Science Publishers, Inc., 2003), p. 21Google Scholar.

19 Kong, Qingjiang, “China's telecom regulatory regime on the eve of WTO accession,” Issues & Studies, Vol. 37, No. 4 (2001), pp. 165–66Google Scholar.

20 Yunxiang Guan, China's Telecommunications Reforms, p. 27.

21 Here all telecoms operators mean “the parent of companies” without special reference. For example, China Mobile is the parent of China Mobile (Zhongguo yidong zongongsi), not China Mobile Limited (Zhongguo yidong youxian gongsi).

22 Dickie, Mure, “China telecoms move raises hopes of overhaul,” Financial Times, 23 May 2008Google Scholar; “China begins revamp of its telecom sector,” Reuter, 23 May 2008.

23 Author's interview in Beijing, May 2008.

24 “China begins revamp of its telecom sector.”

25 Bergsten, C. Fred et al. , China: The Balance Sheet: What the World Needs to Know Now About the Emerging Super Power (New York: Public Affairs, 2006), p. 1.Google Scholar

26 “Too many ministries create telecoms tangle,” China Daily, 13 July 2007.

27 Xinzhu, Zhang, Zhongguo jichu sheshi chanye de guizhi gaige yu fazhan (Regulatory Reform and Development of China Infrastructure Industries) (Beijing: Guojia xingzheng xueyuan chubanshe, 2002)Google Scholar; Pearson, “The business of governing business in China,” and “Governing the Chinese economy.”

28 The 2008 government reform reorganizes the MII as the MIIT. Further discussion on this reform will follow at the end of the section.

29 Yan and Pitt, Chinese Telecommunications Policy, p. 95.

30 Studying Group of the State Control over the Natural Monopoly Industry, “Longduanxing hangye de zhengfu guanzhi wenti yanjiu: dianxinye de zhengfu guanzhi wenti yanjiu” (“Research on the government management problem in the natural monopoly industry: study of the government management system in the telecommunications industry”), Jingji yanjiu cankao (Economic Research Reference), p. 5.; Liu, Shijin and Feng, Fei, Longduan hangye gaige gongjian (The Reform in the Monopoly Industries) (Beijing: Zhongguo shuili shuidian chubanshe, 2006), pp. 228–29Google Scholar.

31 Interview in BUPT, December 2005.

32 This is the system in which only the caller is charged for making a phone call.

33 Yangtze Yan, “Mobile operators launch long-awaited caller-pay schemes,” Xinhua, 9 February 2007.

34 Ibid.

35 “Nation cuts telecoms fees by 53% in five years,” Xinhua, 28 February 2008.

36 “NDRC will fix timetable for mobile phone one-way charging,” ChinaTechNews, 5 February 2007.

37 “NDRC creates preferential telecom cost policy for rural areas,” ChinaTechNews, 30 May 2006.

38 Pearson, “Governing the Chinese economy,” p. 722.

39 Mertha and Zeng, “Political institutions, resistance and China's harmonization with international law,” p. 332.

40 Interviews in Beijing, December 2005, January 2006.

41 Interview in Beijing, May 2008. For the details of the CCP formal organizational structure and functions, see Lieberthal, Kenneth G., Governing China: From Revolution through Reform (New York: W.W. Norton, 2002), pp. 173–75Google Scholar; 178. Barton, Dominic and Huang, Richard He, “Governing China's boards: an interview with John Thornton,” The McKinsey Quarterly, Vol. 1 (2007), pp. 99–107Google Scholar.

42 See article 13 of “Interim regulations on supervision and management of state-owned assets of enterprises,” 27 May 2003.

43 Note that “bianzhi refers to the authorized number of personnel in a party or government administrative organ, a service organization (shiye danwei) or a working unit (qiye), whereas the nomenklatura only lists the most important positions.” Brødsgaard, Kjeld Erik, “Institutional reform and the bianzhi system in China,” The China Quarterly, No. 170 (2002), pp. 363–64Google Scholar. For more extensive studies on the nomenklatura system, see Burns, John P. (ed.), The Chinese Communist Party's Nomenklatura System (New York: M.E. Sharpe, 1989)Google Scholar, and “Strengthening CCP control of leadership selection: the 1990 nomenklatura,” The China Quarterly, No. 138 (1994), pp. 458–91; Brødsgaard, Kjeld Erik and Yongnian, Zheng (eds.), Bringing the Party Back In: How China Is Governed (Singapore: Eastern Universities Press, 2004)Google Scholar, and The Chinese Communist Party in Reform (London & New York: Routledge, 2006); Chan, Hon S., “Cadre personnel management in China: the nomenklatura system, 1990–1998,” The China Quarterly, No. 179 (2004)CrossRefGoogle Scholar.

44 Brødsgaard, “Institutional reform and the bianzhi system,” p. 364.

45 Ibid.

46 Author's correspondence interview with Chinese scholar, Institute of Political Science, CASS, 15 July 2008.

47 Wang Sanwen, “Xiandai dianxin qiye dangwei shishi zhengzhi lingdao de sikao” (“The current Party Committee in enterprise is the political leader's idea”), http://www.chinatelecom.com.cn/sxgz/01/02/t20060116 1679.htm (2002). Wang served as deputy secretary of the Party Committee in Shanghai's Telecom Corporations in 2002.

48 Author's correspondence interview with Chinese scholar, Institute of Political Science, CASS, 16 July 2008.

49 According to the 2008 shake-up of the sector announced on 23 May 2008, China Netcom will be merged with China Unicom.

50 Chuan, Tong, “Why is China's telecommunications market so profitable?” The Epoch Times, 11 October 2006Google Scholar.

51 Before the 2008 restructuring, China Mobile's CEO, Wang Jianzhou, was the Party secretary and the chair of the board, and China Netcom's CEO, Zhang Chunjiang, was also the Party secretary and the chair of the board.

52 Chan, “Cadre personnel management”; Heilmann, “Regulatory innovation by Leninist means”; Pearson, “Governing the Chinese economy.”

53 Pei, Minxin, China's Trapped Transition: The Limits of Developmental Autocracy (Cambridge, MA: Harvard University Press, 2006)CrossRefGoogle Scholar; Nathan, Andrew J., “Present at the stagnation: is China's development stalled?” Foreign Affairs, July/August 2006CrossRefGoogle Scholar; Nathan, Andrew J. and Macfarquhar, Roderick, “Is Communist Party rule sustainable in China?” Reframing China Policy: The Carnegie Endowment Debates, debate transcript, 5 October 2006Google Scholar.

54 Lam, Willy, “Beijing unveils plan for super ministries,” China Brief, 14 March 2008Google Scholar.

55 Interview with NDRC official, Beijing, May 2008.

56 For more information on the 2008 reform, see http://tech.sina.com.cn/focus/dbgg.xcb.

57 See http://www.miit.gov.cn.

58 Clark, Robert, “Beijing unveils plans for telecom super-ministry,” Business Week, 14 March 2008Google Scholar.

59 “Ministry of Industry and Information Technology inaugurated,” Xinhua, 29 June 2008; also see http://tech.sina.com.cn/focus/dbgg_xcb/.

60 Interviews in Beijing, April 2008.

61 McGregor, Richard and Dickie, Mure, “Beijing to create five ‘super ministries’,” Financial Times, 11 March 2008Google Scholar.

62 Interviews in Beijing, December 2006, January 2007, April 2008.

63 Ibid.

64 Interview in Beijing, May 2008.

65 Ibid. Similar points are also raised by other scholars. See Hu Yaqing “Dabuzhi gaige zhihou sheilai jianguan dianxinye” (“Who will regulate the telecoms industry after super-ministry reform?”) Zhongguo jingying bao (China Business Daily), 17 March 2008.

66 For more information on its origin and function, see Yang, Remaking the Chinese Leviathan; Pearson, “The business of governing business in China.”

67 Naughton, Barry, The Chinese Economy: Transitions and Growth (Cambridge, MA: MIT Press, 2007), pp. 298–99Google Scholar. Naughton has most extensively explored the institutional evolution of SASAC and its political and economic implications for China's market reform. See reports in China Leadership Monitor: “The state asset commission: a powerful new government body” (autumn 2003); “SASAC rising” (spring 2005); “Claiming profit for the state: SASAC and capital management budget” (spring 2006); and “SASAC and rising corporate power in China” (spring 2008).

68 Zhen, Cao, “Yangqi ‘guoyou ziben shouyi’ shouqu chu xingui” (“Releasing new regulations on the collection of state capital profits of the central SOEs”), Caijing, 17 December 2007Google Scholar.

69 See Ministry of Finance and SASAC, “Zhongyang qiye guoyouziben shouyi shouqu guanli zanxing banfa” (“Interim regulation on the profits management from central state firm state asset”) (21 December 2007).

70 Author's correspondence interview with Chinese scholar, Beijing, 16 July 2008.

71 Author's correspondence interview with Chinese scholar, Beijing, 23 July 2008.

72 “Interim regulations on supervision and management of state-owned assets of enterprises,” article 13 (27 May 2003); for more details, see http://www.sasac.gov.cn/n2963340/n2964712/3049659.html.

73 Baldwin, Robert et al. , A Reader on Regulation (Oxford: Oxford University Press, 1998), p. 3CrossRefGoogle Scholar.

74 See for more discussion on the differences between regulation-of-competition and regulation-for-competition, Jordana, Jacint and Levi-Faur, David, The Politics of Regulation: Institutions and Regulatory Reforms for the Age of Governance (Cheltenham: Edward Elgar, 2004), p. 6Google Scholar; Margaret M. Pearson, “Regulation and regulatory politics in China's tiered economy,” unpublished paper presented at conference on “Capitalism with Chinese Characteristics: China's Political Economy in Comparative and Theoretical Perspectives,” Indiana University, 19–20 May 2006, p. 5.

75 Author's correspondence interview with Chinese scholar, Beijing, 23 July 2008.

76 The operators independently compile the budget, but long-term large-scale investment particularly needs the SASAC's oversight in the budgeting process. Author's correspondence interview with Chinese scholar, Beijing, 23 July 2008.

77 See n. 74.

78 Yunqi, Zhao, “Guoyou ziben jingying yusan bamai guoqi” (“State capital management budget may anticipate state firms”), Zhongguo caijing bao (China Finance Daily), 23 September 2005Google Scholar.

79 The other six industries are the military, electricity, oil and chemistry, coal, civil aviation, shipping. See “Guanyu tuijin guoyou ziben tiaozheng he guoyou qiye zhongzu de zhidao yijian” (“Leading opinion on enhancing state capital co-ordinating and state firm restructuring”), 18 December 2006, http://finance.sina.com.cn/g/20061218/11133173443.shtml.

80 “2006 Nian guihua fazhan gongzuo huigu ji 2007 nian zhongdian gongzuo silu” (“Looking back the work of planning and development in 2006 and shaping the key task in 2007”), 6 March 2007, http://finance.sina.com.cn/g/20070306/11431246652.shtml.

81 Zhao Xiuqin, “Guoziwei kaishi dianxin yangqi jinxing yeji kaohe” (“SASAC starts to evaluate the economic performance of the central telecoms firms”), 26 February 2008, http://it.sohu.com/20080226/n255359044.shtml.

82 Author's correspondence interview with Chinese scholar, Beijing, 16 July 2008.

83 Interview in Beijing, December 2005.

84 Pei, China's Trapped Transition, p. 108.

85 See Yunxiang Guan, China's Telecommunications Reforms, pp. 24–30; Yu, Liangchun et al. , “Market performance of Chinese telecommunications: new regulatory policies,” Telecommunications Policy, Vol. 28 (2004), pp. 717–18CrossRefGoogle Scholar.

86 According to the latest restructuring plan, China Mobile would take over China Tietong and form the New China Mobile; China Unicom will transfer its CDMA network to China Telecom and merge with China Netcom; China Satcom will be merged with China Telecom. Dickie, Mure, “China telecoms move raises hopes of overhaul,” Financial Times, 23 May 2008Google Scholar; Jing, Li, “Chinese telecom industry consolidated into three giants,” The Economic Observer Online, 28 May 2008Google Scholar.

87 Shuliang, Ming, “China Mobile soars on sector's new shakeup,” Caijing, 23 April 2008Google Scholar.

88 China Mobile is the largest player among operators, and as of 2007 controls about 70% of the domestic market in wireless services. Dickie, “China telecoms move raises hopes of overhaul.”

89 Shuliang, Ming, “Telecoms undergo restructuring again,” Caijing, 13 June 2008Google Scholar.

90 Interview in Beijing, May 2008.

91 “Guoziwei zhuren Li Rongrong: Zhongguo dianxinye kending yao zhongzu” (“The SASAC's director Li Rongrong: China's telecom industry should be restructured”), Beijing wanbao (Beijing Evening News), 18 April 2005.

92 “Leading opinion on enhancing state capital co-ordinating and state firm restructuring.”

93 For example, Eric Harwit analyses the government's fiscal and regulatory industrial policies in China's telecoms equipment manufacturing industry. “Building China's telecommunications network: industrial policy and the role of Chinese state-owned, foreign and private domestic enterprises,” The China Quarterly, No. 190 (2007); Clark, “Beijing unveils plans for telecoms super-ministry.”

94 “China's national audit office to investigate five major telecom companies,” ChinaTechNews, 26 September 2007, http://www.chinatechnews.com/2007/09/26/5920-cnao-to-investigate-fiv.

95 In this study, the telecoms price means service fee, so that they are interchangeable here.

96 Li Deming, “Woguo dianxin zifei jianguan zhengce chuangxin” (“Innovation of regulation policy in China's telecom service fee”), Dianxin shijie (Telecommunications World), 26 October 2006.

97 In a two-way charge system receiving a call is not free.

98 Zhiming, Xin, “Telecom price cuts stir debate,” China Daily, 18 April 2003Google Scholar.

99 It is branded “U Park,” mainly targeting young consumers. Xiao, Chen, “Telecom operators sharpen edge,” China Daily, 12 May 2004Google Scholar.

100 Tao, Cheng, “Xinchanbu ni yingxing jiaoting shouji zifeizhan xinzhengce rujianzaixian” (“MII intends to stop the inflexible price war of the mobile service, new policy is ready”), Nanfang zhoumo (Southern Weekly), 24 June 2004Google Scholar.

101 Ibid.

102 Because of low technological value, Xiaolingtong service has been prohibited by the MII in the major cities, such as Beijing and Guangzhou, until April 2003. Xin Zhiming, “Telecom price cuts stir debate.”

103 Chen Xiao, “Telecom operators sharpen edge.”

104 Shan, Zou, “Telecom price war curbs called into question,” China Business Weekly, 12 July 2004Google Scholar.

105 Yan, Fang, “Dianxinye de yushi zuijin” (“The telecom industry's recent forecast”), Gaige neichan (Reform Internal Reference), No. 9 (2003), p. 29Google Scholar.

106 The MII and NDRC, “Guanyu jinyibu jiaqiang dianxin zifei jianguan gongzuo youguan shixiang de tongzhi” (“Notice regarding further strengthened issues of the telecom fee regulation”), 24 June 2004.

107 The director of the Chinese Academy of Telecoms Research under the MII.

108 Xin Zhiming, “Telecom price cuts stir debate.”

109 Ibid.

110 “Xinchanbu jianting dianxin zifei jiagezhan taol un zhiding xiangguan tiao kuan” (“MII holds back the telecom price war and discusses the establishment of related articles”), Xinjing bao (New Beijing Daily), 25 June 2004.

111 “Dianxin zifei zhengce jianguanhui haidailai xingzheng longduan?” (“Regulatory commission of telecom service fee policy can bring about an administrative monopoly?”), 21shiji jingji baodao (21st-century Business Herald), 6 July 2004.

112 Baldwin et al., A Reader on Regulation, p. 3.