Mumbai: China has eased rules for foreign investment in the country's booming telecommunication industry. China will also soon raise the stake limit that foreign banks can hold in asset management joint ventures with Chinese banks to 49 per cent from 33 per cent, media reports said.
The Chinese cabinet has decided to relax the existing 'Administration of Foreign-funded Telecommunications Enterprises Provisions' rules at its meeting yesterday in a bid to boost the development of the telecom sector of the country by providing an easy access to foreign investors, the reports said.
Reports citing banking source in Shanghai also said the China Banking Regulatory Commission would soon announce relaxation in the rules that stipulate that at least three banks are needed to set up a joint venture asset management company (AMC).
The move comes amidst increased signs of an economic cooling in developing countries, including China and India, as the effects of the downturn that started in the United States continue to spread around the globe.
The new rules have pegged the minimum capital requirement for a foreign investor to manage basic communication services at national or provincial level to nearly half, with immediate effect, the reports said.
The new rules allow foreign listing of domestic telecom enterprises without approval from industry supervisors. However, no relaxation in the capital requirement has been provided to the companies providing value-added services, the reports said.
China has gradually been encouraging foreigners to invest in its financial and telecommunication sectors since it joined the World Trade Organisation in 2001.
Non-banking foreign institutions, under the supervision of the securities regulator, were allowed to take up to 49 per cent in their joint venture asset management firms in China in 2005. Many Chinese banks have set up asset management joint ventures with foreign partners.