China's Ministry of Information Industry has issued a circular, requiring that domestic telecommunications companies not rent, transfer or sell telecom service operation permits to foreign investors.

The circular also says Chinese companies should not provide resources, sites or facilities for foreign investors to run telecom services illegally in China.

MII expressed in the circular, which is entitled "Notice on Strengthening the Management of Foreign Investors' Operation Of Telecom Value-Added Service in China", that most foreign investors have been strictly abiding by the relevant stipulations regarding telecom service, however, a few of them have begun to run illegal services in the country through domain name authorization or trademark registration authorization.

MII requires that telecom value-added service operators use their own domain name or trademark in carrying out business in China. It also asks communications management departments at various levels to conduct examinations of their local telecom companies.

According to China's commitment to the World Trade Organization, foreign-funded companies will be allowed to hold 49% of stakes in China's basic telecom industry by the end of this year.