Dark Past, Grey Present or Bright Future? – Foreign Investors’ Access to China’s Telecommunications Industry and a Political Economy Analysis of Recent Industrial Policy Moves

Abstract

Amid the global economic downturn, Eurozone crisis and Libya war in 2011, Alibaba, Yahoo and Softbank’s dispute over Alipay brought China’s telecoms industry and, more importantly, foreign investment policies into the global spotlight. This article considers Chinese legislative framework regulating foreign investment in China’s telecoms industry, and more importantly, two transactional models, that is, the CCF and VIE structures, foreign investors have adopted in the past three decades to access China’s restricted telecoms industry. This article attempts to unveil the underlying reasons foreign investors creating and utilizing these transactional models and, more importantly, China’s recent regulatory instruments Chinese authorities have taken in tackling the VIE structure in telecoms industry. From a political economy lens, this article offers a possible rationale underpinning such movements in light of China’s policy direction.