International Handbook of Network Industries
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International Handbook of Network Industries

The Liberalization of Infrastructure

Edited by Matthias Finger and Rolf W. Künneke

This extensive, state-of-the-art Handbook provides a comprehensive overview of the various experiences of liberalization across different sectors, regions and disciplines.
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Chapter 23: Reform of China’s Energy and Telecommunications Sectors

Pun-Lee Lam and Alice Shiu


1 Pun-Lee Lam and Alice Shiu INTRODUCTION China’s rapid economic growth since its adoption of an open door policy in 1978 has brought about increasing demand for energy and telecommunications services. The development of these two sectors is of fundamental importance to the economic growth and development of China, as both sectors provide essential infrastructures to support the development of other industries. Previous studies have found a causal relationship between energy consumption and economic growth.2 A similar relationship exists between telecommunications development and economic growth.3 An insufficient energy and telecommunications infrastructure will therefore constrain the growth of many other industries. It will also discourage the wider use of consumer appliances, computer equipment and automobiles, and hence lower the living standard of the general population. Despite the remarkable growth of the energy and telecommunications sectors over the past three decades, per capita energy consumption and teledensity in China are still far below the levels of developed countries. For strategic reasons, the two industries have remained under the ownership and control of the state. Even with China’s accession to the World Trade Organization (WTO) in 2001, foreigners are still not allowed to be majority shareholders of telecommunications enterprises. Major energy and telecommunications enterprises are among the largest state-owned enterprises (SOEs) in China. However, the productivity of these enterprises is low compared with the productivity of their counterparts in other countries, and the problem of labour redundancy is serious. In recent years, China has occasionally experienced energy shortages that have severely disrupted the...

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