(Feb. 4, 1999)

1. The information industry maintained a fast and healthy growth momentum

In 1998, the information industry maintained a fairly rapid grow rate with obvious increase in investment and continuous optimization of the industrial structure. The market expanded further in depth and scope and the quality and returns of the network and economic operations continued to improve.

The communications revenue of the year was 229.5 billion yuan, up by 25.4% over the previous year; the investment in the fixed asset of communications reached 175.4 billion yuan, an increase of 39.2%. Of the newly added GDP, the share of the new increment from communications went from 2.4% a year ago to 4.9% in 1998; the fixed asset investment as a percentage to the social fixed asset investment rose from 5% to 6.1% during the same period.

The overall communications capability was further enhanced. The fiber optic trunk network comprising “eight vertical and eight horizontal lines” was completed 2 years ahead of schedule, covering all the provincial capitals nationwide. The optic cable across the country totaled 1 million km and the toll circuits 1.63 million lines. The Asian-European land optic cable and FLAG submarine optic cable were inaugurated one after the other. With 22.21 million lines added, the office exchange capacity stood at 135 million lines. The GSM network for mobile communications extended to 330 prefectural cities and over 2,000 county towns and offered roaming service with 38 countries and regions. The China public multimedia communications network was interconnected with 28 provinces and autonomous regions. With 2.7 million km of trunk mail route and 84,000 post offices in operation, the postal Green-Card Project made universal money deposit and withdrawal possible in 527 cities above the county level in 30 provinces, autonomous regions and municipalities, increasing interconnected service outlets to 5,738.

The key communications services grew at high speed. With 28.34 million new telephone users added in the year, the total number of users reached 110 million (including mobile users), bringing the national teledensity to 10.64%, urban teledensity to 27.7% and for the cities above the provincial capital level such as Beijing, Tianjin, Shanghai, Nanjing, Hangzhou, Fuzhou, Wuhan, Guangzhou, Haikou and Kunming to over 40%. Telephone service was made available to 67.1% of the administrative villages. Mobile telephony became one of the pillar services of communications, growing the user base by 11.32 million to a total of 24.98 million. The users of data and multimedia communications totaled 1.54 million as result of a rise of a million in 1998. New headway was made in joint construction as 74 national group users built private computer systems with the public communications networks. A dedicated network covering the national ports of entry was completed in collaboration with the General Administration of Customs and other bodies, rendering strong support to the anti-smuggling struggle. China Unicom achieved fairly fast growth in service, increasing mobile telephone users to 1.31 million and radio paging users to 2.02 million and inaugurating local services in Tianjin and Chengdu. With major postal services growing rapidly, the balance in postal savings reached 313.3 billion yuan, philatelic revenue 7.79 billion yuan and EMS revenue 3.12 billion yuan .

The manufacturing industry of electronic and information products showed good performance which led to a boom in the scale of the industry. The sales in 1998 was 310 billion yuan, rising by 14.1%; the value addition of the industry reached 74 billion yuan, up by 13.8%; the profit and tax totaled 23 billion yuan and export rose to 27 billion USD.

Economy of scale was achieved for the production of the main electronic products which won considerably higher domestic market share and included 2.88 million PCs, up by 73.9%; 32.87 million lines of SPC exchanges, an increase of 67.3%; 32.96 million color TV sets, 29.6% higher; 10.2 million mobile handsets, up by 105% and 1.5 billion integrated circuits, a 25.4% increase. With our electronic and information product manufacturing industry ranking among the tops ones worldwide, the production of color TV, stereo, telephone sets, etc. leaped to the first place in the world. In parallel to the continuous growth in the industrial scale, the electronic products improved both in variety and quality. For the first time, the share of the capital electronic goods in the product mix exceeded that of consumption and component goods as a result of more rational product mix. The “909” integrated circuit project, the color TV tube project, the new component dual processing and other projects proceeded smoothly.

Making up 85% of the total output value of the whole industry, the coastal areas were still the main force spurring growth in the manufacturing industry of electronic and information products, as reflected by a 24 percentage increase jointly contributed by 8 provinces and municipalities of Guangdong, Jiangsu, Fujian, Zhejiang, Shandong, Beijing, Tianjin and Shanghai. Guangdong was the first province in China to exceed 100 billion yuan in output value. With an ever-growing role in driving growth in the electronic industry, the economy under the shareholding system contributed an 11% increase and gave rise to a development situation in which the public ownership remained dominant among other coexisting ownership forms, so that the advantages of each could be shared by all.

 

2. The separation of the functions of government from those of enterprises was accelerated and the reforms in all fields were unfolded successfully.

Nineteen Ninety-eight was the year in which the greatest effort was made in the most extensive reform of the information industry. In compliance with the MII's plan to determine the size, posts and functions of the staff approved by the State Council, the MII's restructuring was basically completed and the Ministry performed its functions normally. Meanwhile, the work for establishment of the State Postal Bureau came to a successful conclusion. The MII was pressing on with the work to delink with the enterprises directly under the Ministry based on the relevant plans set by the central government.

To meet the needs for the national restructuring and the posts and telecom development, the MII made a major decision to separate postal and telecom operations on the nationwide basis. By the end of December of last year, the post and telecom offices in municipalities, prefectures and counties and the provincial postal bureaus had been established and started operating under the new scheme. The separation of posts and telecom into two major sectors laid the groundwork for accelerated growth and more in-depth reform of the communications industry. At the same time, good progress was made in divesting the national posts and telecom sectors of their radio paging asset and in restructuring.

The electronics industry was committed to doing a good job in the pilot projects for building a modern enterprise system with a view to promoting big corporation strategy. With new products as the powerhouse, the capital as the ties with the parties involved and the market as the development opportunity, the sector sped up the pace of fostering conglomerates with overall competitive strength in economy, technology, capital operation, international trade, etc., better enabling the rational flow and recombination of production elements and increased level of intensive operation and giving rise to a development pattern with the large enterprises leading the medium-and-small ones in growth. The activities associated with the top 100 electronic enterprises yielded marked results and their sales revenue already accounted for 62.3% of the industry as a whole.

3. Macro-regulation was greatly intensified and the sectoral management stepped up

The Ministry stepped up the standardization and management of software products and market by issuing and implementing the “Interim Procedures for the Software Product Management” and formulated an IC card application and development plan as well as relevant management measures, in a bid to spur the development of the Chinese IC card industry. Based on the principle of combining introduction, assimilation and independent innovation, the Ministry put forward the policy measures for supporting the development of the mobile communications industry. A number of Chinese enterprises such as GDT, Datang, ZTE and Huawei turned out products with independent IPR and effected overall breakthroughs in the manufacture of SPC exchanges and mobile communications equipment. Shanghai Bell and other joint venture enterprises further increased local content. By the end of 1998, the home-made exchanges had constituted 98% of all the newly added telephone exchange capacity.