Telecommunications revolution in China

21 October 2002

"China is like a sleeping giant. And when she awakens, she shall astonish the world" — Napoleon Bonaparte, 1803.

Dean of Commerce Prof Doug Pitt has co-authored a new book on the revolution in the Chinese telecommunications industry.

IN CERTAIN aspects, the changes in China during the past two decades have been startling, similar to the former USSR, where Western goods and culture have been widely welcomed by the urban elite. As China moves fully onto the international stage — as indicated by its recent admission into the World Trade Organisation (WTO) — foreign trade is increasing and new technology is being embraced “with a vengeance”, observes UCT's Professor Doug Pitt, Dean of Commerce.

“The giant is fitfully wakening,” says Pitt. “It is clear that the Chinese government has made strenuous efforts to engage those developments that attract foreign capital and which lead to trade with the West. Special economic zones have been created around the coastal fringe to emulate the successful Hong Kong model.”

In particular, the telecommunications industry in China has undergone a “seismic” revolution over the past 20 years, and underpins the Chinese government's ambition to modernise this vast, overpopulated country.

Pitt has a special interest in telecommunications. In his latest book, Chinese Telecommunications Policy, co-authored with Professor Xu Yan of the Hong Kong University of Science and Technology, Pitt offers an in-depth study of telecommunications development in China, from its inception in the 1870s to the current environment, including all the inherent contradictions and complexities.

In the past, says Pitt, telecommunications in China was the sole preserve of state companies and central government. “The Peoples' Liberation Army (PLA), for example, ran its own businesses and had its own telephone company. But the Chinese have realised they need to establish companies to push telecommunications development at a greater pace.”

It is not a Western model of development, Pitt adds. “This is liberalisation with Chinese characteristics, set in a bureaucratic, centralised system. Hence the dynamic tensions inherent in the change.”

But why study China? China, despite a low per capita income, is the seventh largest trading nation and the world's fastest growing economy. Its evolution from a centrally planned economy to one that is moving to embrace free market systems, is a live case study, holding valuable lessons for policy makers, notes Pitt.

“In the liberalisation of the Chinese telecommunications industry, which was marked by the establishment of China Unicom in 1994, we have an apposite place to look at change,” he explains.

“It's almost like a laboratory for technology and economic policy. For this reason China has attracted the interest of many researchers and policymakers throughout the world. It also provides a useful lesson for developing countries like South Africa. While the two countries may seem worlds apart, in many ways South Africa is a microcosm of China; with a dual economy that feeds an urban elite and expanding middle class, but with vast sections of the rural population excluded from economic development."

The book reflects an accumulation of insights gathered over a period of time and includes the results of several field trips to China. The collaboration with a Chinese co-author was obviously useful. The authors have ties going back to Yan's PhD studies in business under Pitt's wing at Strathclyde. Today Yan is an assistant professor in the Department of Information Systems Management at Hong Kong University of Science and Technology. He is also on the board of directors of the International Telecommunications Society (ITS). The two have teamed up on numerous projects and studies.

The fieldwork for this book occurred in two tranches; from 1994–1996 when both were resident in Scotland, and later involving more intensive fieldwork post–1997, when Yan relocated to Hong Kong. Since 2000, Yan has participated in several training programmes for officials from the Ministry of Information Industry (MII) as well as executives from Chinese operators such as China Telecom and China Mobile. This provided opportunities for face-to-face contact with “policy influentials” in Chinese telecommunications.

The book was written on top of Pitt's day job as Dean of UCT's largest faculty. Most of the text was compiled at his temporary home in Lover's Walk (with the aid of some good Cape Sauvignon Blanc, he adds) soon after he arrived at UCT from Strathclyde Business School in Glasgow.

Pitt is also chief editor of the substantial journal Telecommunications Policy, which has 11 editions a year. It's an onerous job but one that keeps Pitt in touch with international telecommunications policy.

Lastly, an interesting bit of history: Pitt's dedication in the book is to his father, South African-born Harold Pitt who served aboard the British gunboat, HMS Sandpiper, on Yangtze river patrol in 1937 during the Sino-Japanese war, and on which Richard McKenna's book, The Sand Pebbles, was based. 20th Century Fox later turned this into the action adventure starring Steve McQueen. It was the only film for which McQueen was nominated for an Oscar for Best Actor.

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