II. FINDINGS OF FACT AND RECOMMENDATIONS
Findings of Fact
- The Chinese government exercises control over China's telecommunications industry and carriers. The Chinese telecommunications market is the largest in the world, in terms of number of subscribers. The Chinese government views the telecommunications industry as critical and has set goals for the industry to "enter the ranks of powerful countries." To achieve this goal, the Chinese government exerts control over the domestic telecommunications market, including restraining foreign investment. Further, the largest domestic carriers are government owned; the Chinese government handpicks these firms' leaders, frequently shuffling the senior leadership between the companies. The carriers are also subject to "national service," requiring that they put State interests ahead of their commercial interests.
- China does not provide U.S. telecommunications companies reciprocal access to the Chinese market and requires foreign carriers seeking to operate in China to enter into joint ventures with Chinese companies. These joint ventures often require U.S. companies to give their technology, proprietary know-how, and intellectual property to their Chinese partners. In the two decades since China acceded to the World Trade Organization, "not a single foreign firm has succeeded in establishing a new joint venture" to access China's basic telecommunications services market and "only a few dozen foreign-invested suppliers have secured licenses to provide value-added telecommunications services, while there are thousands of licensed domestic suppliers."
- The Chinese government encourages Chinese companies to take advantage of more open international markets. Through its "Go Out" policy announced in 1999, the Chinese government provided financial support to state-owned companies to encourage expansion into global markets. Telecommunications carriers are among the companies that benefited, and they have since established operations across the world, including in the United States.
- The Chinese government engages in cyber and economic espionage efforts against the United States and may use telecommunications carriers operating in the United States to further these efforts. The U.S. government has highlighted the Chinese government's cyber and economic espionage efforts against the
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