Chinese government reforms target high-tech industries

China plans to create a new "super ministry" to oversee the high-technology industry, including telecommunications.

China's Ministry of Information Industry (MII), which oversees many of the country's high-technology industries, including the telecommunication sector, will be combined with other government organizations into a single body, according to China's state-owned media.

The official Xinhua News Agency described the new body as a "super ministry," incorporating the current MII, some parts of the National Development and Reform Commission (NDRC), the State Council Informatization Office (SCITO), most of the Commission of Science and Technology for National Defense (COSTIND), and the State Tobacco Monopoly Administration.

The shakeup is part of a government restructuring plan announced during China's National People's Congress (NPC) this week. The new organization will be called the Ministry of Industry and Information, and is one of five super-ministries created by the plan.

The reforms aim to eliminate overlapping responsibilities within China's vast bureaucracy and improve efficiency, Xinhua said. Whether or not the new ministry can achieve those goals will only be determined by the passage of time, but observers are optimistic.

"One thing is clear, decision-making will be faster," said Bryan Wang, Springboard Research's country manager for Greater China.

The new ministry should streamline the Chinese government's decision-making process and eliminate some of the bureaucratic rivalries that hampered policy decisions in the past, he said.

That will clear the way for important policy changes to take effect, including the long-awaited restructuring of China's state-owned telecommunications carriers, Wang said. Once that restructuring is complete, China is expected to finally issue licenses for 3G (third-generation) mobile services.

Plans to restructure the telecommunications industry are widely expected to create three operators that combine both fixed-line and mobile operations. The country's largest mobile operator, China Mobile, is expected to be combined with China Railway Communications, a small fixed-line provider set up by the Ministry of Railways.

The other mobile operator, China United Communications (China Unicom) will be split into two parts. The operator's GSM (Global System for Mobile Communications) mobile network will go to fixed-line carrier China Network Communications Group (China Netcom), which will likely change its name to China Unicom. China Unicom's CDMA (Code Division Multiple Access) network will be merged with China Telecommunications Group (China Telecom), another fixed-line operator.

"That's almost confirmed," Wang said. "There aren't any other proposals on the table."

Ultimately, the Ministry of Industry and Information will want to see competition increase in China's telecommunications industry, preparing these companies for eventual expansion into international markets and competition against large multinational operators, Wang said.

"The new ministry will be more of a regulator, rather than a stakeholder for the three companies," he said.

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