two years ago."[1] Some researchers, however, suggest these percentages are under-inclusive given that Chinese officials often exert pressure to transfer technology orally to avoid creating a written record, and many companies avoid raising the issue to evade negative publicity or retaliation from the Chinese government.[2]
China's foreign investment approval process is also complex and variable. China imposes strict administrative licensing requirements for telecommunications carriers—they must secure approval from up to six government agencies before operating in the country.[3] This can include an anti-monopoly and national security review by the Ministry of Commerce; a review of the company's name by the State Administration of Industry and Commerce; and approval from the Ministry of Information Industry and Technology, China's telecommunications regulator.[4] Although the telecoms licensing approval timelines are officially either 60 or 180 days, depending on the type of license sought,[5] the overall approval process can last more than a year.[6] Complicating the bureaucratic licensing process is the discretion held by local officials, who may add unofficial requirements[7] and "impose deal-specific conditions in exchange for the licenses."[8]
These restrictions have blocked foreign carriers from accessing China's BTS market.[9] Since China's accession to the World Trade Organization almost two decades ago, "not a single foreign firm has succeeded in establishing a new joint venture to enter this sector."[10] China's VATS regulations have also "created serious barriers to market entry for foreign [carriers] seeking to enter this sector."[11] As a result, "only a few dozen foreign-invested [carriers] have secured licenses to value-added telecommunications services, while there are thousands of licensed domestic suppliers."[12] Although China has publicly agreed to lessen barriers for foreign
- ↑ Id.
- ↑ Wayne M. Morrison, Cong. Research Serv., RL33536, China-U.S. Trade Issues 44 (2018).
- ↑ See U.S. Chamber of Commerce, China's Approval Process for Inbound Foreign Direct Inv. 10, chart 1 (2012).
- ↑ Specifics for the telecommunications industry are laid out in the Regulations on the Administration of Foreign-invested Telecommunications Enterprises (revised in 2016). See also U.S. Chamber of Commerce, China's Approval Process for Inbound Foreign Direct Inv. 8-20 (2012) (listing other requirements).
- ↑ U.S. Chamber of Commerce, China's Approval Process for Inbound Foreign Direct Inv. 8-20 (2012).
- ↑ 2018 U.S. Trade Representative Report, supra note 15, at 37.
- ↑ See id. at 20 (quoting an investigation submission that states, "Chinese officials are careful not to put such requirements in writing, often resorting to oral communications and informal 'administrative guidance' to pressure foreign firms to transfer technology").
- ↑ Id. at 39.
- ↑ Office of the U.S. Trade Representative, Exec. Office of the President, Nat'l Trade Estimate Rep. on Foreign Trade Barriers 119 (2020).
- ↑ Id.
- ↑ Id. (citing restrictions, including "opaque and arbitrary licensing procedures, foreign equity caps, and periodic, unjustified moratoria on the issuance of new licenses").
- ↑ Id.
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