(Yicai) April 15 -- China has specified the places where limits on foreign ownership of some value-added telecoms services, including internet data centers, internet service provision, and online data and transaction processing, will be removed.

The restrictions will be lifted in pilot areas in the cities of Beijing, Shanghai, and Shenzhen as well as the province of Hainan, a circular issued by the Ministry of Industry and Information Technology said recently.

The move aims to further widen access to the country’s telecom services sector. The MIIT began to pilot the opening-up of value-added telecom services in the Shanghai Free Trade Zone, with six out of eight such businesses having no foreign ownership caps. As of March 31, 1,926 foreign firms have been allowed to provide telecom services in the Chinese mainland.

Value-added telecom services refer to the use of public network infrastructure to provide additional telecom and information services, including IDC, e-commerce, and information services.

Allowing leading foreign telecom firms to operate in the Chinese mainland will enrich the products and services on offer to users and boost service levels and international competitiveness, according to experts. Offshore data centers and cloud service companies can help advance the development of local computing power infrastructure, they added.

The services involved in the trials are IDC, content delivery networks, internet service provision, online data and transaction processing, information platforms and delivery services (excluding e-news, network publishing, network audio-visual, and internet cultural operation), and information protection and processing services.

IDC and online resource collaboration were previously inaccessible to offshore firms outside of Hong Kong and Macao, said Wang Zhiqin, deputy director at the MIIT's think tank China Academy of Information and Communications Technology. There is no limit on foreign ownership of these businesses in the pilot areas, he added.

With the artificial intelligence boom, computing power has become a strategic resource in short supply worldwide and a key pillar of the digital economy’s development, Wang pointed out. Chinese data center racks have had a compound annual growth rate of over 30 percent since 2018, he noted.

The new policy welcomes foreign companies to invest in and build China’s computing power infrastructure and also provides domestic firms with more cloud computing service options, Wang said.

Basic telecom and third-party IDC operators dominate the Chinese IDC sector. Third-party IDC operators took a 52 percent market share to overtake basic telecom operators, who hold the rest, for the first time in 2022.

Editors: Liao Shumin, Martin Kadiev