China's 3G rollout sets off politically charged scramble for equipment sales amid global slump

China is starting a long-delayed introduction of third-generation mobile phone service, setting off a politically charged scramble by foreign and Chinese equipment makers for up to $41 billion in orders.

Chinese sales could be crucial for suppliers such as Motorola Inc., Alcatel-Lucent SA and Nokia-Siemens Networks as global demand slumps. State media say the largest Chinese carrier, China Mobile, expects to sign up 100 million 3G subscribers — more than most nations' entire mobile markets — in the next three years.

But how much business the international equipment makers can get depends in part on whether regulators try to boost China's high-tech industry by ordering wireless carriers to buy domestic products. Beijing has tried to use such restrictions to nurture other fields, prompting complaints by the United States and other trading partners.

The leading domestic competitors are Huawei Technologies Ltd. and ZTE Ltd., ambitious upstarts with government support that already sell low-cost gear in Africa and Asia and are improving their technology.

Foreigners are likely to get less than half of China's 3G orders, said Duncan Clark, chairman of BDA China Ltd., a Beijing consulting firm.

"It's basically an intensely political process," Clark said.

The United States and European Union say they are closely watching how the telecom suppliers are picked. Washington and the EU are pressing Beijing to abide by World Trade Organization promises to treat foreign and domestic companies equally.

Even though the wireless carriers are state-owned, Chinese companies sometimes resist regulators' orders to do things that hurt profits. It is unclear whether the carriers consider Chinese equipment good enough to support complex 3G services that will form the core of their future business.

Source: AP News