China initiates its new infrastructure campaign, with 5G leading the way

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Yang Zhou
Zhong Lun Law Firm, Shanghai

China’s new infrastructure campaign is being treated as a national new priority

The Government Work Report which was delivered at the ‘two sessions’[1] in May 2020 (the 'Report’), for the first time lists ‘new infrastructure construction’ together with new urbanisation initiatives and major transportation and water conservancy projects as critical areas for expanding effective investment. The clear reference to a ‘new infrastructure’ reflects China’s priority and preference in economic development.

The official and more concrete definition of ‘new infrastructure’ was given earlier in a briefing in April 2020 by Wu Hao, Head of the Department of High-tech Industry of the National Development and Reform Commission. According to Wu, the new infrastructure mainly refers to three broad fields, that is: (1) the information-based infrastructure; (2) the integrated infrastructure; and 3. the innovative infrastructure.

Information-based infrastructure

Specifically, the information-based infrastructure mainly refers to the infrastructure generated by the evolution of new generation information technologies, such as:

  • the communication network infrastructure represented by 5G, the internet of things, the industrial internet and satellite internet;

  • the new technology infrastructure represented by artificial intelligence (AI), cloud computing and blockchain; and

  • the computing infrastructure represented by data centres and intelligent computing centres.

Integrated infrastructure

The integrated infrastructure mainly refers to the in-depth application of the internet, big data, AI and other technologies to support the transformation and upgrading of traditional infrastructure, which then forms the integrated infrastructure such as intelligent transportation infrastructure and intelligent energy infrastructure, and so on.

Innovative infrastructure

The innovative infrastructure mainly refers to the public welfare infrastructure supporting scientific research, technology development and product development, such as major science and technology infrastructure, science and education infrastructure, and industrial technology innovation infrastructure.

Investment in 5G is leading the way

Promoting the construction of the new infrastructure, as a national strategy of China, is highly valued by the Chinese Government. In 2019, the Ministry of Industry and Information Technology of China (‘MIIT’) officially issued commercial 5G licences, initiating a nationwide 5G rollout. Nearly a year later, the MIIT further unveiled measures to accelerate the pace of 5G construction and improve the innovation support capabilities of 5G technologies. The China Academy of Information and Communications Technology (‘CAICT’) estimates that the total investment in 5G infrastructure projects could reach RMB 1.2tn (over USD170bn) by 2025.

In addition to 5G, other sectors of the new infrastructure in China are also witnessing rapid progress. For example, the White Paper delivered by the Development Research Centre of the State Council predicts that in the next five years, over 60 per cent of the country’s businesses and government agencies will adopt cloud computing for their daily operations.[2] Deloitte also gives an overview on China’s (AI) industries, stating that in China’s AI industries, technologies are rapidly penetrating into traditional sectors such as public administration, finance, healthcare, autonomous driving, among others.

Beijing expects that the new infrastructure campaign could offset the economic slowdown brought on by the Covid-19 pandemic and boost overall national industrial upgrade. Though there is no guarantee that this campaign can bail China out in the context of the economic slump, it at least creates opportunities to drive capital to flow into sectors at the leading edge. The ‘new infrastructure’ therefore becomes a buzzword to both domestic and foreign investors.

How can foreign investment participate in China’s new infrastructure campaign?

Compared with the traditional infrastructure, the main force for the investment of the new infrastructure are market players instead of the government. Favourable policies have been issued not only for domestic investors but also for foreign ones. During the two sessions, China declared its intention to expand its open-up policies to foreign investment. Specific to the new infrastructure field, several industrial sub-sectors of new infrastructure have been added as areas that would enjoy favourable business environments and governmental incentives. Such areas include manufacturing of 5G core components, cloud computing equipment and AI.

With that said, construction of the new infrastructure, especially the information-based infrastructure, is likely to involve telecoms licensing requirements. For example, 5G may involve the basic telecoms services of cellular mobile communication services. Big data centres may involve value-added telecoms services of internet data centres (IDC), and industrial internet may involve the value-added telecoms service of online data processing and transaction processing.

In general, foreign investment in China’s telecoms industry is limited to the scope as stated in China’s World Trade Organization (WTO) commitments under which the share ratio held by foreign investors for these value-add telecoms services shall not exceed 50 per cent.[3] Hence, some industries in the new infrastructure which involve telecoms licensing requirements may not have been opened up or fully opened up to foreign investment. For example, for IDC services, currently, only qualified Hong Kong or Macau service providers may invest in China under a special arrangement between mainland China and Hong Kong/Macau with a 50 per cent shareholding cap. Other types of foreign investors are not allowed to invest in this field directly and must find alternative ways to penetrate the Chinese market.

In addition to the market entry limits for foreign investment, foreign investors need to be aware of the regulatory requirements for investing in the new infrastructure in China, especially relating to cybersecurity and data compliance. In the seven key sectors of the new infrastructure, most are data centric and their operations are either essentially focusing on digitalisation and intellectualisation or at least supported by data. Also, considering the new infrastructure is likely to relate to national security and public interest, the operators in the new infrastructure field will probably be identified as critical information infrastructure operators. If so, they must comply with strict requirements on cybersecurity such as local data storage and cross-border data transfer requirements. Therefore, cybersecurity and data compliance are key regulatory considerations for investing in the new infrastructure.


China has already begun rolling out its new infrastructure campaign nationwide, which provides an opportunity for all market players, including foreign investors. To enter into and take advantage of this great surge in China’s economic development, it is necessary for foreign investors to be aware of the telecommunications, cybersecurity, data compliance and other regulatory requirements in China, and carefully plan their investment strategies accordingly.


[1] The term ‘two sessions’ refers to the annual plenary sessions of the National People’s Congress and the National Committee of the Chinese People’s Political Consultative Conference.

[2] Development Research Centre of the State Council, The White Paper on the Development of China’s Cloud Computing Industry (2019) accessed 14 July 2020.

[3] See China’s Schedule of Specific Commitments: 2(C). Telecommunication Services thereunder specifically refer to the following types: electronic mail, voice mail, online information and database retrieval, electronic data interchange, enhanced/value-added facsimile services (including store and forward, store and retrieve), code and protocol conversion, online information and/or data processing (including transaction processing).

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