China’s leaders believe 5G will help drive its economy into the future. While both the commercial potential of 5G and the huge costs required to build 5G networks have been well publicized, the economic policies Beijing is employing to make China the first truly 5G country are not widely reported.
In China’s 13th five-year plan the central government labeled the development of 5G as a “strategic emerging industry.” Beijing views 5G as critical and transformative if China wants to become a technology innovator. It also wants to win respect by being the first country to deploy 5G networks, a global race which began well before there was a clear definition of 5G.
In 2013, Beijing created the IMT-2020 5G Promotion Group to coordinate 5G R&D in the public and private sectors. The group consists of three government agencies—the Ministry of Industry and Information Technology (MIIT), the National Development and Reform Commission (NDRC), and the Ministry of Science and Technology (MST)—as well as major mobile phone makers, chip manufacturers and the three major telecoms operators. The IMT-2020 5G Group has managed some of the recent 5G tests in China.
The other important initiative for 5G in China is Made in China 2025 aimed at upgrading Chinese manufacturing by leveraging Internet of Things (IoT) applications. For this aim to be achieved, 5G must be up and running as the technology is required for dedicated smart manufacturing industrial solutions.
China’s two biggest mobile phone makers, Huawei and ZTE, have been receiving government grants to help develop 5G. In 2015, the National Integrated Circuit Industry Investment Fund, a Beijing-backed investment fund, agreed to buy a 24% stake in ZTE’s microelectronics subsidiary. According to its 2016 Annual Report, Huawei has received $72.57 million in government grants for R&D projects—mostly 5G R&D.
This past June an MIIT-affiliated think-tank released a market report stating China Mobile, China Unicom, and China Telecom will spend approximately $47.77 billion on 5G development by 2023. As majority state-owned enterprises (SOEs) these operators’ financial commitment to 5G is a telling reminder of Beijing’s priorities.
Despite so much support for 5G in China, an underdeveloped regulatory environment will be a major challenge not only for state-backed telcos and mobile phone makers, but also other players in the 5G ecosystem. In China Telecom’s 2016 Annual Report , the company warns “the timing of the issuance of 5G permits, the frequency bands allocated to 5G services, relevant regulations, as well as the technological standard for 5G services…are still uncertain.”
China’s industrial policies will continue to back 5G research and development. As 5G gets closer to launching in China, expect Beijing to issue more specific policies to address some of these regulatory uncertainties.