2. Background
Being an element in the national economy and political system, telecommunications reform
cannot be carried out independently of a macro reform program. For a long period China strictly adhered to a socialist regime that excluded competition. With limited public-owned economic elements as a supplement, the national economy was controlled by state-owned enterprises. Private and foreign capital was restricted. The socialist regime did not admit the role of economic law. Instead, resources were allocated and the market was regulated with administrative measures,which were formed through coordination using a centralized, fragmented administrative system.This system had the following characteristics: different state-owned industries were under the central control of and belonged to specific governmental institutions. Such an institution had usually a title of a ministry or a national company. These institutions had two functions: taking charge of specific industries as governmental branches and carrying out the headquarters of their affiliated companies. In addition to these institutions some comprehensive administrations were also established.