China combats US carrier restrictions by opening telecoms pilots to foreign outfits – Beijing drops 50% foreign ownership cap to attract new investment

• Pilot scheme drops the need for foreign companies to form Chinese JVs
• The 50% cap on foreign ownership has been lifted in these regions
• US asserts China poses "an unacceptable risk"

China has reportedly expanded a pilot program it's been running since last year, allowing foreign telecom companies more access to its market amid despite tensions with the US seeing Chinese companies being actively blocked.

This important update comes as US regulators continue to block Chinese telecom operators on national security grounds.

As a result, what we're seeing are opposing measures, with the US pursuing restrictions and China pursuing greater openness.

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China counters US telecom restrictions with bid for openness

Per the update, China has now lifted the 50% foreign ownership cap on telecom value-added services within specific regions that fall under the pilot, meaning that companies can now establish foreign-owned operations rather than needing to team up under a part-Chinese joint venture.

Beijing, Shanghai, Hainan, Shenzhen and other zones have been approved under the scheme, and the permitted projects span internet data centers, internet access and information services, per SCMP reporting.

"I don’t think there will be a significant impact on the domestic market," Omdia senior principal analyst Yang Guang said. China's telecom market is already crowded with established domestic players, meaning that foreign companies might find it had to gain meaningful market share.

China's Ministry of Industry and Information Technology (MITT) has approved licenses for 166 foreign companies since February 2025.

It's unclear whether China plans to broaden this scheme beyond the approved zones and/or beyond telecommunications.

Conversely, the US maintains that China poses "an unacceptable risk to the national security of the United States or the security and safety of United States persons," hence scrutinizing the involvement of foreign firms across critical national infrastructure.

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