On 7 Apr. 2022, the State Council issued a relevant decision to make substantial amendments to the “Provisions on Administration of Foreign-invested Telecommunications Enterprises” (hereinafter “the Provisions on Administration”, 外商投资电信企业管理规定), which came into effect on 1 May 2022.
The new Provisions on Administration simplifies the original 23 articles into 17 articles, revises definition of “foreign-invested telecommunications enterprises” in Article 2 into “enterprises lawfully established by foreign investors within the territory of the People’s Republic of China to provide telecommunications services”, and deletes the expressions like “Sino-foreign equity joint venture”. Such revision makes the relevant concepts and expressions in Provisions on Administration consistent with those in the Foreign Investment Law.
Provisions on Administration further relaxes the restrictions on foreign equity ratio.
It provides that “The ultimate proportion of capital contribution made by foreign investors in a foreign-invested telecommunications enterprise providing basic telecommunications services (excluding radio paging services) shall not exceed 49%, except as otherwise provided by the state. The ultimate proportion of capital contribution made by foreign investors in a foreign-invested telecommunications enterprise providing value-added telecommunications services (including basic telecommunications services in the radio paging services) shall not exceed 50%, except as otherwise provided by the state.”
Prior to that, there was no such exception clause. This opens up the possibility for the Chinese government to relax restrictions on foreign investors in the telecommunications services.