Source: Carnegie

Reprinted with permission from Foreign Policy Sept.-Oct. 2000.

Review of Info, February 2000, Cambridge

Now that permanent normal trading relations with China are more or less permanent and almost normal, conventional wisdom dictates that Chinese consumers will emerge healthier, wealthier, and more wired under the new telecom-friendly, pro-market regime. But internal Chinese turf wars over telecom services and infrastructure paint a more complex picture.

Faced with a rush of foreign investment, nervous state monoliths are fiercely battling for territory. Nowhere is this urgency more apparent than in the race to build and control China's nascent information superhighway, where the telecommunications and cable/broadcasting sectors are exchanging body blows. At stake is universal communications service, as well as the hazy, evolving notion of the public interest in China?the "right" to be wired?a point made by University of California at San Diego Professor Yuezhi Zhao in the telecommunications and media journal info.

Zhao outlines the regulatory background of today's battles, detailing the history behind the elite-driven establishment of China's telecommunications network and the somewhat more ad hoc (and widespread) development of a cable and broadcasting network. Although each bureaucracy is fighting for the right to provide broadband?a high-volume telecommunications pipeline?to the masses, a deep-seated ideological chasm divides the two sides: While the telephone was traditionally a means of elite political communication, cable television, as an organ of party propaganda, has been accessible to ordinary households in ordinary villages since its inception.

Behind the street battles?and there have been many, with wire-cutting teams and armed crews out in force?questions loom. Should communications service be treated as a commodity or as a public good? Should the public interest, encompassing the notion of communications access for all of China's citizens, be equated with the emerging notion of consumer interest, as embodied by China's rising and bottom-line-oriented middle class? As Zhao points out, China's uneasy transition from a planned economy to a market economy has blurred traditional roles and left many government offices focusing on profit motive rather than public service.

The result, the author notes, is an out-of-control telecommunications buildup that rewards foreign suppliers without necessarily promoting development. Her statistics flesh out the picture: In 1998, 71.6 percent of China's 87.4 million residential phones were in urban areas. Rural areas, comprising the majority of China's population, accounted for the rest. Meanwhile, despite unprecedented network growth between 1985 and 1997, telephone service to China's 760,000 villages grew an average of less than 1 percent a year.

Hence, underlying the internal political rifts is another chasm: the so-called digital divide, or gap between the world's wired and unwired?in this case the gap between China's ultraconnected urban areas and its muffled hinterlands. Glossy media images of Beijing residents Web-surfing in hip Internet cafes contrast sharply with the reality of one village the author visited last year. Nearly 10 percent of its households had dropped cable television due to sharply increasing fees. For those who assume a smooth digital future for all of China, Zhao's arguments should provide some static.