Cheaper phones predicted as state appears to relax rules

China has announced plans to remove the legal restrictions that prevent companies making mobile phones in the country without permission.

The easing of rules was announced by the official State Council in Beijing this week.
While manufacturing licensing requirements for almost 200 products and services are to be repealed, mobile communications devices appear to be the most significant.

Existing rules demanding administrative approval for any firm wishing to make mobile phones in China were introduced in 2004 by the National Reform and Development Commission.

These laws built on existing restrictions that appeared intended to control the use and spread of communications devices.

China is effectively governed by a single party which has historically been extremely reluctant to relax its oversight of politically influential fields including media and communications.

Removal of the laws may not necessarily make entry into the industry a certainty for manufacturers, however.

China's government has in the past removed rules that appear to restrict free trade, but then used other regulations, or simple bureaucratic foot-dragging, to maintain a degree of control by less direct means.

Shares in mobile phone and component makers without much exposure to China have generally risen on the news.

Investors and analysts expect many of them to shift manufacturing to China, thereby cutting worldwide manufacturing costs and increasing sales in the world's largest mobile phone market.

Chief among these potential new entrants are several giant Taiwanese electronics makers, including Asus and Hon Hai Precision Industry, generally better known under its Foxconn brand.

China currently hosts more than 40 handset makers licensed under the 2004 regulations.