China is a developing country. In 1980, there were only 4 million fixed-line telephones, with a penetration rate of 0.4%. Such backward telecoms services had once seriously constrained the growth of its national economy. Since the adoption of the reform and opening policy, China has determined to speed up the construction of telecom infrastructure. Gone through the preparation period in 1980s, China’s telecoms industry had undergone a period of takeoff in 1990s, and then by the beginning of this century, the industry entered a stage of steady and fast growing period till now. The telecom reform was carried out just in the latter part of the takeoff period from 1998 to 2002 of China’s Telecoms.
During the takeoff period, the number of subscribers of all telecoms services in China witnessed the exponential growth (See Fig. 1). The numbers of fixed-line telephone and mobile phone had increased with annual growth rates averaged 36% and 130% respectively. In 1995, the Internet service was open to public. The Internet users reached 2.25 million by 2000. The latest statistics showed that Fixed telephone subscribers have reached more than 350 billion,mobile phone approch nearly 400 million, and the internet subscriber also increased very fast and get to 111 million.
Fig.1. The number of public telecom network subscriber in china
Also in the 10-year takeoff period, the averaged annual growth rate of telecoms service revenue in China was as high as 40%, around 3-4 times of GDP in the same period (See Fig. 2). Due to the increasing subscriber base, the relative growth rate began to drop, from its peak 68.8% in 1993, down to 34.8% in 1997 before the reform.
Fig.2. Growth of telecomservice revenue in comparison with GDP
The investment in public telecom networks increased year by year, from ¥ 4.9 billion in 1990 up to ¥ 264.2 billion by 2001. The share taking in the whole country fixed assets investment increased from 1.1% in 1990 up to its peak of 7.2% by 2001 (See Fig. 3). As the basic network infrastructure has taken shape, China telecom investment, for the first time, appeared with a negative growth in 2002.
Fig.3. Investment in telecom construction
It is quite clear that, with the continuous binvestment and high-speed growth in the 90s, China’s telecoms industry has been transformed from a“bottleneck” of the economy into a “leading industry”of the economy.
