The paper analyzes why after more than a decade China's telecom service sector is not fully open. What prompted Government to allow FDI to come in a phased and geographically restricted manner. What kind of regulations Government has put in place to protect the interests of foreign investors. How this sector performed during the global financial crisis and what role FDI played in the sector. The findings suggest that it is handiwork of the Chinese Government to retain the sector as restricted.

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... t allowed limited FDI to come and geographically available to consumers to gauze the initial impact, and keep it an extremely urbanized affair. Ideological reasons also played a role in restricting FDI in telecom services and allowed the sector to move quite cautiously. On the whole, State control of communications network and allowing or disallowing of FDI has long been viewed as one of the important aspects of security and sovereignty. The price competitiveness and discomfort to the consumers have been ignored in the best interests of national sovereignty and security. It concludes China's regulatory framework for telecommunications is relatively opaque and difficult to understand. The sector never received 'State Patronage' as was extended to the manufacturing sector.