Market Access Report: Information Technology

Driven by strong government support and robust market demand, China's IT industry has reportedly grown by 20% annually over the past decade. Public spending in the IT sector is expected to be US$120 billion between 2001 and 2005, which will increase the IT industry's share of China's GDP from 5.8% to 7% and generate about 20 million new jobs. While foreign investors play a significant role in this sector, domestic players are increasingly distinguishing themselves, as is evidenced by the recent restructuring of China Telecom, the impending launch of 3G services by a consortium of eight domestic companies, and the intense competition between Beijing and Shanghai to become China's equivalent to Silicon Valley.

As a result of its WTO accession, China committed to 60 WTO and GATT ancillary agreements, a number of which directly or indirectly affect its IT industry. Under the Information Technology Agreement (ITA), China must gradually eliminate tariffs on key IT products. The Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPs) mandates that China amend its legislation to bring it into full compliance with TRIPs. China also must adhere to the Basic Telecom Agreement (BTA), which obliges the country to provide market access and national treatment in all aspects of telecom services and to introduce greater transparency in its telecom licensing regime.

Tariffs