In the absence of regulatory reform, the Chinese mobile market will not see significant change despite the MIIT’sdecision to officially license and allow foreign investment into MVNOs. Liberalisation, however, is positive, and is part of a broadereffort to reduce debt in the capital-intensive telecoms market. Given current market conditions, we also expect large local players,such as Alibaba and Tencent-backed JD.com to dominate the MVNO space, as these companies already have a large subscriber baseon their online platforms, and selling MVNO services will be easier. The ICT sector is integral to China's 13th five-year plan(2016-2020) and will stimulate growth in other industries. While the plan lays out ambitious broadband targets, profitability in thetelecoms sector will be largely undermined by the state-owned operators' need to compress prices to meet them. On the otherhand, local IT and/Consumer Electronics/Q2 2018 companies will gain from a higher budget for R&D (2.1% of GDP to 2.5%) and reducedreliance on imports for high-tech inputs.