Telecommunications Policy 40 (2016) 81–88

Contents lists available at ScienceDirect

Telecommunications Policy
URL: www.elsevier.com/locate/telpol

Editorial

Convergence and liberalization in China's ICT sector: New

market and new ecosystem

1. Background

1.1. Preamble

China's state-owned telecom colossi had been sheltered from private competition for years until the turn of the new
millennium, particularly since 3G deployment in the 2010s, with the advent of mobile Internet and applications. While
telecom SOEs (State-Owned-Enterprises) remain tendentiously indulgent in the good old fashioned service-package busi-
ness strategy featuring voice and SMS (Short Message Services), the industry ecosystem has been undergoing major
transformation, rather unwittingly. IM (Instant Messenger) platforms such as Tencent's QQ and WeChat1 have emerged, out
of the blue, to pose serious rivalry to China's telecom operators in the voice and SMS market and even beyond, along with
untold Internet-enabled mobile applications in personal banking, commerce, entertainment, education, and so forth. Since
one decade ago, there has seemingly been a consensus in the industry in China on the supposedly imminent metamorphosis
of telecom SOEs from being mere network-operators to being so-called comprehensive-information-service-providers
(CISP), a vision that now sounds more vocalized than actualized. Chagrined at missing the first-mover-advantage in the IM
segment, Jianzhou Wang, former Chairman of the industry leader China Mobile, unbosomed2:

“Speaking of the development of mobile Internet apps, we simply couldn't avoid mentioning the case of WeChat
platform […]. I, myself, once tried to avoid the use of WeChat in the beginning until several years later when I found
myself simply couldn't not to use it […]. WeChat did change people's life—No matter what, though, I always feel a
sense of lost.”3

Wang sounded even more rueful about China Mobile's inaction to preempt in the mobile payment market, which, as per
Wang, had constituted “profound lessons.” He confessed that4:

“When we [China Mobile] were niggling over which technology may perform better, we effectively failed to engage
ourselves in the actual development of new applications […]. Yet, in the meantime, Alibaba and Tencent had suc-
ceeded in using the simplest form of technology to fulfill mobile payment services.”5

1
QQ is an IM platform launched by Tencent in 1999, before the company's launching of its new mobile-based IM platform, WeChat, in 2011, which has
since become China's biggest social networking platform as well as personal e-wallet port. Both platforms, QQ and WeChat, can now be accessed from
personal computers and mobile devices. The initial version of QQ was reportedly copied from ICQ, world's first ever IM platform, launched by a Mirabilis
company in 1996, which was acquired by AOL later in 1998.
2
Prior to his appointments with China Mobile, Dr. Jianzhou Wang served as the Chairman and CEO of China Unicom. In 2014, two years after his official
retirement, Dr. Wang published a memoir-like book, Mobilising Everything (yidong shidai shengcun) (Beijing: CITIC Press).
3
This is cited from Jianzhou Wang's article "Those years, mistakes made by China Mobile" (na xie nian, zhongyidong cengjing fan guo de cuowu)
(Tsinghua Business Review 2015, issue 5)
4
Id.
5
Alibaba launched its Alipay, an online payment applications, on October 18, 2003, to which, mobile payment features were added later in February 27,
2008. On June 13, 2013, Yu’e’bao was launched as an affiliation to Alipay, which offers flexible small-sum personal savings services accredited with offering
attractive interest rates. Alipay has since become China's largest online third-party payment platform. In March 2014, Tencent also launched its online
payment services on its WeChat platform.

http://dx.doi.org/10.1016/j.telpol.2015.12.002
0308-5961 & 2015 Elsevier Ltd. All rights reserved.
82 Editorial / Telecommunications Policy 40 (2016) 81–88

Standards
China Datang, Europe, U.S., etc.

Chipsets Equipments Software

Qualcomm, Texas ZTE, Huawei, Datang, Alcatel, Nortel, Nokia-Siemens, Symbian,
Instruments, VIA, Potevio, Ericsson, etc. Android,
Infineon, etc. iOS, etc.

Terminal
Handsets
Network Infrastructure
Institutions Xiaomi, Apple,
Sumsung, China Mobile, China Unicom, China Telecom, China Satcom, China
Lenovo, Cable, China Tower, etc.
Huawei,
Coolpad,
Norkia,
Motorola,
Sony, HTC,
TCL, Vivo, MVNOs Apps Info Services
OPPO, etc. Suning, QQ, WeChat, Sohu, Sina, Netease,
Telling, Alipay, Yu’e’bao, Baidu, Yahoo, etc.
FunTalk, Didi, etc.
Huatone, etc.

Use

Fig. 1. China's ICT sector: an ecosystem view.

Being former leader of the telecom SOE, Wang seemed leery in reference to the short-lived Feixin, an IM platform
launched in the pre-3G era by China Mobile on a par with Tencent's QQ. Confronted with aspirant competitors, Feixin has
been withdrawing, rather anticlimactically, from the market, following a high-sounding debut. Positioned itself as the
“Mobile Communications Expert” (yidong tongxin zhuanjia) in the 1990s and then the “Mobile Information Expert” (yidong
xinxi zhuanjia) in the 2000s, China Mobile boasts one of the largest mobile communications networks in the world. The
Feixin case educates us that competition can strip off the veneer of technological seniority when market surfaces as the
touchstone. In the shade of impending retrograde to a channelized-existence, at this point, Chinese telecom SOEs' nim-
bleness in catapulting themselves into CISP remains to be seen.

1.2. Technology-driven new ecosystem

Past decade has witnessed the metamorphosis of China's telecommunications sector from a conventionally
operator-dominant industry to a more converged and liberalized ICT ecosystem, amid global technological trends in
cloud computing (Forde & Doyle, 2013; Noam, 2014), big data (Shin, 2015), and mobile applications (Feijoo, Gómez-
Barroso, Aguado, & Ramos, 2012; West & Mace, 2010). The ecosystem, as exemplified in Fig. 1.1, is now inhabited by
interrelated and interdependent actors, which typically encompass players involved in activities such as: network
operation; manufacturing; MVNO; applications and info services provisioning; chipsets and software development;
and standard-setting—all of which are ultimately prosecuted under and affected by given institutions. Industry
boundaries are blurring within the new ecosystem, therewith competition interaction and regulatory remit.
Those actors are effectively involved in a “coopetition” in the ecosystem (Basole, Park, & Barnett, 2015; Iansiti &
Richards, 2006; Moore, 1996, 2006)—i.e., they may compete in the end market while cooperate in the production/
operation process. Notably, domestic actors have been playing formative roles in the emergent ecosystem by
taking affirmative action in those activities they are involved. For instance, alongside the evolution process comes the
rising of homegrown 3G TD-SCDMA and 4G TD-LTE standards and technologies, notwithstanding domestic
vendors are still paying substantive royalty dollars to foreign-originated Intellectual Property Rights (IPR)
 Editorial / Telecommunications Policy 40 (2016) 81–88 83

holders.6 Domestic brands have also been faring well in the smart phone manufacturing industry, particularly in
terms of meeting low-tier consumer demands. Today, the Chinese consumers are finding it harder to go without
access to mobile apps which have seemingly become part and parcel of daily routine to many. Network operators,
remaining dominant actors notwithstanding, are no longer dictating in the emergent ICT ecosystem that features the
rise of mobile applications.
In its effort to catch up and build indigenous innovation capacities in the ICT sector (Gao & Liu, 2012; Kshetri, Palvia, &
Dai, 2011; Steen, 2011; Vialle, Song, & Zhang, 2012; Xia, 2011, 2012a), the Ministry of Industry and Information Technology
(MIIT), China's sector-specific regulatory body in telecommunications, issued 4G licenses to telecom SOEs on December 4,
2013, roughly five years after its 3G licensing action took place on January 7, 2009. Deviating from its 3G licensing path,
however, this time, the MIIT walked a fine line by first issuing the homegrown 4G TD-LTE licenses to three operators before
ultimately issuing additional foreign 4 G FDD-LTE licenses on February 27, 2015 to China Unicom and China Telecom,
respectively. Obviously, the fifteen-month window would have rendered a spatiotemporal buffer for the development of
domestic TD-LTE during its inchoate stage of deployment. Recall that the homegrown TD-SCDMA has demonstrated some
immaturity vis-à-vis its foreign counterparts and a timing upgrade towards 4G and beyond may create a chance for China to
cast a sounder technology base for catching up and even leapfrogging in the era of next generation networks (Xia, 2011). For
that matter, China Mobile has been handpicked by its “government matriarch” and invested with a filial duty in making
good on homegrown standards and technologies, a technology policy paradigm often labeled as techno-nationalism or neo-
techno-nationalism. Presently, China is deliberating on the possible forms and formats of 5G mobile standard which is
expected to be commercialized by 2020.7
The rapid adoption of mobile Internet has been reshaping China's ICT sector profoundly and the economy as a whole,
through spurring entrepreneurship and investment in Internet-driven business innovations. The migration towards mobile
Internet has been paralleled by the restructuring of revenue streams and the emergence of new competition zones. Rev-
enues streamed from voice and SMS are shrinking for today's telecom SOEs, supplanted by growing traffic-based revenues
from burgeoning applications. Among the trendsetters include international brands like iPhone as well as domestic
developers, often private enterprises, such as Tencent and Alibaba. When it comes to tapping new market domains, how-
ever, telecom SOEs and private enterprises have scored unevenly, with service innovations being more often initiated by
private actors in the ecosystem (Fig. 1). While telecom SOEs still attach great importance to the promotional efforts aimed at
smartening up 3G/4G subscription statistics, they are nonetheless outperformed by private actors in some new business
lines, as the case of Feixin vs. QQ has revealed.
The metamorphosis has been affected by a confluence of technological, market, and institutional forces. Now, what role
the government has played in the transformational process? Since telecom reform in 1994, China's telecom regulatory
authority has maneuvered a crusade of industry restructurings (Harwit, 2008; Wu, 2009; Xia, 2011, 2012b). Major structural
maneuverings include:

 Bringing in new entrant, China Unicom, into the longtime government-monopolized telecom market, in 1994;
 Incorporating and breaking up the Directorate General of Telecommunications (DGT), then de facto national telecom
operator, into service-specific companies (i.e., wireline, mobile, satellite, and paging), in 1998;
 Splitting the national fixed-line telecom carrier, the former China Telecom, into South and North companies (i.e., China
Telecom and China Netcom), in 2002;
 Reshuffling and reconsolidating the telecom industry into three full-service operators (i.e., China Mobile, China Unicom,
and China Telecom), in 2008, on the eve of 3G licensing;
 And, more recently, bringing in Mobile Virtual Network Operators (MVNOs)8 and incorporating China Tower9 in charge of
the construction, maintenance, and operation of national transmission tower infrastructure, in 2014.

Moreover, the last-step institutional obstacle confronting China's decade-long effort in making two-way market entry
possible between telecom and cable TV operators has supposedly been disencumbered, with the State Council's recent
promulgation of a new ordinance “The Planning on the Promotion of Tri-network Convergence” (sanwang ronghe tuiguang
fang’an) in September 2015. It should be noted that, although above structural maneuverings are necessary within the
historical context and have played pivotal roles in promoting telecom competition, they are nevertheless not seen as once-

6
It should be noted, though, homegrown manufacturers like Huawei and ZTE have been on their way towards becoming innovative actors, both have
been active in patent applications in recent years (Kang, 2015).
7
The IMT-2020 (5G) Promotion Group—China's national organization for supporting and promoting researches on 5G standardization, which was co-
founded by the MIIT, the National Development and Reform Commission (NDRC), and the Ministry of Science and Technology—held its first meeting in
Beijing on April 19, 2013. In the third IMT-2020 (5G) summit held in Beijing on May 28, 2015, the China Academy of Telecommunication Research (CATR)
released two white papers on 5G wireless technology architecture and 5G network technology architecture, which foresee the coming of 5G era in China in
2020 and beyond.
8
Note that the MIIT was quite measured in promulgating the introduction of the MVNOs by terming it, instead, as the Mobile Resale Services Providers
(MRSP) in its official ordinance “Probational Method for Mobile Communications Resale Services” (yidong tongxin zhuanshou yewu shidian fang’an).
9
In July 2014, China Communications Facilities Services Co. Ltd was established, which was later renamed as China Tower in September 2014. As of
November 2014, China Tower had completed the institutions of its headquarter as well as provincial and prefectural branches, with leading managerial
officials dispatched from China Mobile, China Unicom, and China Telecom.
84 Editorial / Telecommunications Policy 40 (2016) 81–88

for-all actions (Xia, 2011, 2012b), nor should they be construed as unalloyed regulatory intention towards completely lib-
eralizing entry for innovative services.10 At this point, there still exists legitimate reason for the structural crusade to be
continued, as a renewed round of industry restructuring has seemed imminent amid the unmet expectation towards the
2008 reform in leveling the playing-field as well as the established trend in technology convergence (e.g., mobile standards
are becoming fewer and intermodal substitutability are becoming more feasible). Recall that promoting competition and
avoiding duplicate investment have been a resounding regulatory thread surrounding the structural crusade from the
outset. This time, however, the regulatory authorities might want to, ex officio, be better informed on how to define
structure per se (i.e., market definition) in the depth of a converging and liberalizing ICT ecosystem, which prompts further
reflections in the era of mobile Internet.

1.3. Dilemmas and issues in the mobile Internet era

The nurturing of a vibrant and robust ICT ecosystem hinges on effective interface between market and institutions. In
practice, the Chinese government is juggling multifold conflicting goals between:

 Techno-nationalism vs. gaining access to the latest technology systems;

 State-dominance vs. entrepreneurship and private participation;
 Easing facility-based market entry vs. maintaining ICT infrastructural safety.

It all comes down to the conciliation and reconciliation between economic, societal, and political objectives. The existing
ICT governance system in China, which still smacks of a “iron-fist” patrimony, is assuming multiple and sometimes con-
flicting functions which rang from state-assets supervision, investment planning, price and sector-specific regulation, anti-
monopoly enforcement, to personnel and organizational management (Harwit, 2008; Wu, 2009; Xia, 2010, 2012b).11 The
intricacy of the governance system adumbrates not so much regulatory overlaps as conflicting vested departmental interests
which can lead to regulatory disarray in practice. By this token, when institutional reform lags behind business practices in
China's emerging ICT ecosystem—within which, innovative business models and service forms are pushing to outcrop—
regulatory overreach can be worse than regulatory inaction. From time to time, regulatory agencies have been perplexed
when confronted with new tech-services such as WeChat, Alipay, Yue’e’bao, and Didi,12 applications that are melting industry
and market boundaries, which tend to be launched in the absence of guiding ordinance and/or regulatory permit. By and
large, China's policy and regulatory communities have been contentious about the nature of these types of apps when they
first came out—e.g., should they be framed as telecommunications/information services, or should they be treated as ser-
vices that fall into industry categories of finance/banking or transportation?

2. Motivation of the special issue

With the world's largest user base, China's telecommunications industry is to witness even more drastic shift towards
convergence and liberalization in the coming decade. A series of recent eye-catching industry policy, alongside a number of
established technological trends, are manifesting this tendency. The groundbreaking introduction of private MVNOs and
China Tower, the government's steadfast commitment to convergence between telecom and cable TV networks, and, more
impressively, the burgeoning of Internet-enabled mobile applications, among other technological trends, are redefining the
industry ecosystem. These trends will translate into implications in the emerging contour of coopetition, business model,
and regulatory framework, and, ultimately, industry performance and consumer welfare. New theoretical, managerial, and
policy issues and questions therefore arise or resurface which are worth further investigation.
Recent years have seen increasing scholarly attention to the Chinese ICT sector. Under the emerging technological
backdrop, however, new business practices are incessantly pushing market boundaries and therefore calling for institutional
shifting. We envisioned an imperative of a graduated, if not wholesale, concomitant shift in research orientation towards
rigor and theory-building through the renewal of research strategy and analytical tactics in order to better inform the
industry and policy communities. A philosophical and methodological shift is hence expected in future research initiatives
in idea-generation and thematization, framing of research questions, selection of theoretical and/or statistical replications
and generalization, and so forth.

10
Note that the telecom regulator was once considering, upon the request of telecom SOEs, a clampdown on some new apps vying with telecom
carriers by shunting SMS from the latter.
11
The governing system encompasses multiple executive and ideological departments, e.g., MIIT (sector-specific regulation in telecommunications),
NDRC (price regulation), State Administration of Press, Publication, Radio, Film and Television (content and cable TV regulation), Organization Department
of the Communist Party of China (appointing and evaluating top officials of telecom SOEs), State-owned Assets Supervision and Administration Com-
mission (state-assets watchdog), Ministry of Commerce (anti-monopoly enforcement in market concentration).
12
Didi has become the largest one-stop consumer transportation platform in China, after a recent consolidation with its competing brand, Kuaidi, on
February 14, 2015.
 Editorial / Telecommunications Policy 40 (2016) 81–88 85

This special issue is intended to serve the purpose by encouraging relevant researches, focused or comparative, in the
juncture of convergence and liberalization in China's ICT sector which offers a dynamic test-bed for investigating those
diverse technological, economic, managerial, and policy elements. The special issue is meant to bring up new knowledge in
intended areas conceptually, analytically, and theoretically. Original works are sought that address critical issues and ideas
as well as testing innovative concepts and theories or models from a multidisciplinary perspective, qualitatively and/or
quantitatively.

3. Themes investigated

Fourteen original research papers are integrated into the China's ICT special issues. Topics of the papers mainly cover
economic impacts of the ICTs (GDP per capita and labor productivity), emerging industries (cloud computing) and appli-
cations (mobile payment and Internet finance), catching-up and global participation of homegrown manufacturers, own-
ership domination in national standardization initiatives, and universal service obligations. There are also two papers that
examine Internet governance and regulatory decision issue. Specific contents of the volume are summarized as follows.

3.1. Economic impacts of the ICTs

Telecommunications has been regarded by the Chinese government as among the ‘‘pillar industries,’’ not only because
the industry accounts for 2.85% of national GDP, but also because of its spillover effects on the general economy.13 Two
papers focus on the economic impacts of ICTs. Michael R. Ward and Shilin Zheng’s paper “Mobile telecommunications service
and economic growth: Evidence from China” kicks off the special issue. A collaborative work between two American and
Chinese scholars, the paper estimates the effects of mobile telecommunications as well as the interaction of mobile and
fixed telecommunications on economic growth. Using panel data for 31 provinces of China for the sample period 1991–
2010, the authors find a positive effect of mobile telephony on GDP per capita growth, with the positive effect being larger
during the first decade (1991–2000) than the second decade (2001–2010). Further, they find that mobile and fixed services
have a combined contribution of 2% GDP growth rate before 2001 but only 0.5% thereafter, suggesting a diminishing
marginal return of telecommunications usage on economic growth. Possible endogeneity bias regarding the bi-directional
relationship is also addressed in their estimation.
By contrast, three scholars from India measure the impacts of ICT on labor productivity. In their paper “The effects of ICT*
on output per worker: A study of the Chinese economy,” Ronald Ravinesh Kumar, Peter Josef Stauvermann, and Aristeidis
Samitas model and test the impact of ICT development on productivity growth over China's post-reform era. Using data
extracted from World Development Indicators and Global Development Finance database, the authors examine the asso-
ciation and causality between, inter alia, output per worker and five indicators of ICT (i.e., Internet users, mobile sub-
scriptions, fixed broadband subscriptions, telecommunication lines, and hi-tech exports). Their findings suggest that while
all five ICT measures are driving long-run economic growth, the dominant drivers are mobile and fixed-line telephony.
Hence, more targeted development policies are implied which, in this case, other things being equal, highlight the role of
mobile and fixed-line telephony in the overall ICT advancement in boosting long-run productivity.

3.2. Cloud computing: development and institutions

Clouding computing has been listed among China's “strategic emerging industries” since the country's 12th Five Year
Plan (FYP).14 Two papers examine the cloud computing industry in China. In his paper “Institutional and economic factors
affecting the development of the Chinese cloud computing industry and market,” Nir Kshetri, a US-based scholar, explores
institutional and economic forces, which are often contradictory, conflicting, and paradoxical, in shaping China's cloud
computing industry. In so doing, the author characterizes how institutional factors (regulative, normative, cognitive) and
linkages in the economy (upstream, downstream, and horizontal linkages) may facilitate or inhibit the cloud industry in
China, based on data and statistics obtained from a number of secondary sources. Despite the constraining effect of insti-
tutional mindset in tightening the flow of Internet content as well as the immaturity of the overall industry ecosystem, it is
found that China's cloud industry and firms have registered rapid development thanks to the government's mobilization as
well as private entrepreneurship.
By contrast, Jiang Yu, Xiao Xiao, and Yue Zhang, three China-based scholars, take an actor-network theory (ANT) per-
spective in approaching China's cloud computing industry. Their paper “From concept to implementation: The development

13
According to the National Bureau of Statistics of China, China's gross domestic product (GDP) in 2014 amounts to CNY 63 646 billion, out of which,
CNY 1 815 billion are revenues generated by the telecommunication services industry (See, e.g., “The Statistics Bulletin of National Economy and Social
Development in 2014,” released by the Bureau on February 26, 2015.)
14
In 2012, the central government promulgated The Development Planning on the National Strategic Emerging Industries for “The 12th FYP” (“shi er wu”
guojia zhanluexing xinxing chanye fazhan guihua), in which, cloud computing and the Internet of things (IOT) are listed as among the 20 "national key
projects." As an initial step to promote the cloud computing industry, MIIT and NDRC initiated 15 so-called “model projects” in five cities which include
Beijing, Shanghai, Shenzhen, Hangzhou, and Wuxi.
86 Editorial / Telecommunications Policy 40 (2016) 81–88

of the emerging cloud computing industry in China” offers a comprehensive and up-to-date description of the evolving
process and landscape of China's clouding computing industry as well as the role-actor interactions therein. Using both
primary and secondary data generated from interviews and useful secondary sources, the paper presents a longitudinal
schematization of China's cloud ecosystem which, as per the authors, falls into different phases and is characterized by a
top-down approach of ICT-related development. The establishment of facilitating platforms such as China's Cloud Com-
puting Promotion and Policy Forum (3CPP) has supposedly enhanced and coordinated government-industry collaboration
and interaction, which expedites the translation process from policy and business concepts to industry level
institutionalization.

3.3. Mobile apps: m-payment and Internet finance

M-payment has been developing rapidly in recent years in China, in which, private third-party-payment (TPP) entities
have tended to gain competitive edge over telecom SOEs in developing and deploying innovative m-payment platforms.
Clearly, an ecosystem view on the nascent segment is pertinent. Two EU-based scholars, Jie Guo, a Finland-based PhD
student, and Harry Bouwman, a scholar of the Netherlands, contribute to this topic. In their collaborative paper “An ana-
lytical framework for an m-payment ecosystem: A merchants' perspective,” the authors propose a comprehensive frame-
work for analyzing the m-payment ecosystem based in the Chinese context. Following an extensive literature review, the
authors stratify the framework into three constructs, namely, core business, extended network, and business ecosystem,
based on which, a dozen propositions are developed. They then use interview techniques in getting inside the actual
situation and identifying institutional and behavioral links, mainly from a merchant's perspective, between the adoption
process and the business ecosystem idiosyncrasies.
By contrast, two Korean scholars, Yongwoon Shim and Dong-Hee Shin, examine China's financial technology (Fintech)
segment through the lens of the ANT paradigm. In their paper “Analyzing China's Fintech industry from the perspective of
Actor-Network Theory,” the authors seek to identify factors contributing to the rapid growth of, and focal actors in the
translation process in, China's Fintech industry, based mainly on archival documents study. The paper succeeds in capturing,
longitudinally, the basic landscape of China's Internet finance ecosystem by framing its historical development into four
stages—namely, from conventional state-owned banking system to relatively diversified Internet banking ecosystem, the
process of which highlights the pivotal role of the TPP entities—an initiative that differentiates the paper from previous
researches on similar topics. On a more general level, the paper demonstrates the evolutionary mechanism of technology-
enabled service/business model innovation in a converging environment, in which, technology itself arises as an actor.
However, two China and US-based scholars take a comparative approach towards China's m-payment segment. In their
paper “Mobile payments in Japan, South Korea and China: Cross-border convergence or divergence of business models,”
Miao Miao and Krishna Jayakar, conduct a comparative case study of three Asian countries with regard to their market
situations, strategic alliances, and government regulations. Based on extensive archival study, the authors intend to explore
the evolutionary path of m-payment business models in China by juxtaposing China with more advanced neighboring
markets. To this end, they compare the adoption of main operational models drawn from the literature—namely, mobile
operator-led, bank-led, third-party platform-led, and hybrid models—in three countries where heterogeneous regulatory
environments can exert disparate influences on the m-payment ecosystem. They predicted that, unlikely to converge to
either Japanese or Korean model, China is likely to embrace simultaneously multiple models in the mid-term, which is
attributed by the authors to the contradictory incentives created by regulations.

3.4. Manufacturing and global participation

Only within several years, China's homegrown mobile phone manufacturers, such as Huawei and ZTE, have out-
performed many of foreign rivals and become the bestsellers home and abroad. In their paper “Neo-techno nationalism: The
case of China's handset industry,” Yongwoon Shim and Dong-Hee Shin, two Korean scholars, examine the development of
China's mobile handset manufacturing industry and market—which has undergone significant transformation in recent
years—through the lens of ANT and based on a selected strand of events. In contrast to previous researches on similar topics,
the ANT framing provides a different perspective in looking at the seemingly ever-evolving mobile phone ecosystem in
China. The drastic transition has happened as a result of the interest-driven constitution and reconstitution of partnerships
between focal actors such as the Chinese government and other human and non-human actors, a process which is char-
acterized by the authors as from techno-nationalism to neo-techno-nationalism.
Nonetheless, specifically how far have China's telecommunications manufacturers gone global? Yutao Sun and Seamus
Grimes offer a dedicated firm level analysis on the topic. A collaborative work between two Chinese and UK scholars, the
paper “China's increasing participation in ICT's global value chain: A firm level analysis” investigates China's participation in
ICT global value chain (GVC), based primarily on firm-level international trade data released by China Customs as pub-
lications in China Customs Magazine. Firm level analyses are performed based on the grouping of firms into three categories,
namely, Own Brand Manufacturers (OBMs), Component Companies, and Electronic Manufacturers (EMS)/Original Design
Manufacturers (ODMs). The paper offers an overall picture of the interrelationship of the firms while also identifying key
players, among which, domestic firms such as Huawei, ZTE and Lenova are rising quickly—this is despite the fact that, as per
the authors, China remains in the low value-added segments due to its ongoing dependence on foreign technologies.
 Editorial / Telecommunications Policy 40 (2016) 81–88 87

3.5. Ownership in standardization process

Does corporate ownership affect firms' incentive and capacity in partaking in standard-setting? Xiaolu Liu and Honglin Li,
both from Renmin University of China, take on the question, building on an econometric endeavor. Unlike previous
qualitative-oriented researches on similar issues, Liu and Li’s paper “Ownership domination in standardization: Evidence
from Chinese industrial firms” takes a firm-level perspective and employs a quantitative method in examining the impact of
ownership on firms' participation in the Chinese standardization process, based on an unbalanced panel data of 814,184
observations from statistics releases of relevant national authorities. After controlling for dummies such as firm-level R&D
investment, firm size and age, subsidization, and high-tech attribute, significant ownership domination is found in China's
standardization activities over the sample period 2005–2007, in which, domestic firms are found much more likely to draft
standards than foreign counterparts; but domestic SOEs do not necessarily exhibit similar tendency over other domestic
firms. The study confirms some elements of the techno-nationalism claim.

3.6. Universal service obligations and rural informatization

Universal service obligations (USO) has become an explicit public policy issue in China since its telecom reform in early
1990s. In the pre-reform era, the USO was enforced by the DGT in the form of the Village Access Project (VAP) which was
supported by a cross-subsidization mechanism. The market reform had effectively led to a stalemate for a while in the VAP
constructions. In the aftermath of widening rural–urban gaps, however, the VAP was reactivated in the 2000s and expanded
to a broader rural informatization concept aimed at providing “comprehensive information services.” The integration of
“access” and “applications,” once succeeded, may constitute a milestone in the arena of USO implementation. What tra-
jectory has been followed by and how effective is the implementation of rural informatization in China? What have proved
to be the factors leading to success or failure? Above all, does China's institutional uniqueness complicate or simplify these
questions?
Those questions are answered in two companion papers authored by Jun Xia, a Chinese scholar, who follows an insti-
tutional approach in documenting the Chinese case. In the first paper “Universal service policy in China (I): Institutional
elements and ecosystem,” an ecosystem model and institutional conceptual framework are created as the basis for the
analysis and assessment of the Chinese model. In the companion paper “Universal service policy in China (II): Case study
and institutional variables,” specific projects are studied. It is found that China has succeeded, at best, in the supply-side
(“access” level) of the rural informatization ecosystem, as the Chinese model has emphasized primarily on the formal side of
institutions but considerably less so on the informal side. Accordingly, factors contributing to implementation success have
highlighted the functioning of regulative institutions while considerably less so of the normative-cognitive aspect. Policy
implications are offered which call for a shift to the demand-side of the ecosystem.

3.7. Internet governance and regulatory decision issue

The Internet creates commercial opportunities as much as raises regulatory and governance issues, particularly when it
comes to the regulation of cyberspace contents and communications in the Chinese context. In their paper “Moral goodness
and social orderliness: An analysis of official media discourse about Internet governance in China,” Di Cui and Fang Wu, two
Hong Kong-based scholars, employ a media discourse approach to examine how China's Internet governance framework
evolve in tandem with technology innovation. Based on a corpus of 301 articles regarding Internet governance published in
People’s Daily during 2000–2014, the authors use quantitative content analysis and qualitative discourse analysis techniques
in examining the major themes and their evolution and interactions. The results demonstrate, inter alia, a relatively con-
sistent highlighting of moral goodness and social orderliness by the Chinese regulatory authorities as justifications for
Internet governance. Institutional implications may also be collaterally drawn from the paper with regard to the market
development of new services or business models which are content-sensitive.
Telecommunications industry distinguishes itself from manufacturing industries by its possessing of certain unique
techno-economic characteristics—e.g., network externality, or consumption-side scale economy—which can lead to the
deviation of market behavior and hence market outcome from optimum. Thereby, an effective regulation, which is weaved
into an even broader formal and informal institutional environment, must be in place to safeguard desirable socio-economic
objectives. In his empirical work “Test of the mediating effects of regulatory decision tools in the communications regulator,”
Kuo-Tai Cheng, a Taiwan-based scholar, develops and tests a model examining the mediating effect of regulatory decision
tools (represented by three fundamental orientations: personnel, regulatory instruments, and delegated powers) on the
relationship between governance mechanisms (measured by: clarity of roles, accountability, transparency, participation, and
independence) and regulation. Eight hypotheses are developed and then tested based on a survey research conducted with
164 employees of the communications regulator in Taiwan. The results shed interesting lights on the associations between
governance mechanisms and regulation.
88 Editorial / Telecommunications Policy 40 (2016) 81–88

4. Concluding remarks

The China's ICT special issue brings up to date knowledge about the recent development and dynamics of China's ICT
ecosystem in the juncture of convergence and liberalization. More specifically, papers of the volume help bridge the gap in
our understanding of the theoretical, managerial, and policy issues regarding, inter alia, the economic impacts of ICTs, the
emerging industries (cloud computing) and applications (mobile payment and Internet finance), catching-up and global
participation of homegrown manufacturers, the relevance of ownership to standardization activities, rural informatization,
media discourse about Internet governance, and regulatory decision issue—most of which are not or inadequately resear-
ched thus far. Future research initiatives, focused or comparative, will be worthwhile in addressing other critical issues with
regard to, inter alia, China's emerging market structure and ICT ecosystem, transformation of telecom SOEs, market and
regulatory convergence, impacts of MVNOs on competition development, and separation of network operation and service
provisioning.

Acknowledgments

As the special issue editor, I would like to thank Professor Erik Bohlin, Editor-in-Chief of Telecommunications Policy, for
the opportunity and support to bring this special issue together. I am grateful to anonymous referees for their invaluable
review services. My research on China's ICT sector receives support from the National Social Science Fund of China (NSSF)
(Grant no. 13BJY020).

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Jun Xia
School of Economics and Management,
Beijing University of Posts and Telecommunications, Beijing 100876, China
E-mail addresses: junxia66@gmail.com, xiajun@bupt.edu.cn