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The splitting of postal regulation from business marks a crucial step of China's postal reform, but it should not be the final one.

China Post, or the State Postal Bureau, used to have both administrative and business functions. It has often been accused of tilting towards state postal business and discriminating against private mails.

Now, the provincial and municipal postal regulation body will start to work within two weeks and the China Post Group Corp will be launched at the end of this year.

After this reform, the regulator is supposed to take an unbiased role in maintaining market order. state and private postal service providers, according to the reform plan, will be put on a level playing ground.

This is certainly good news. It will not only benefit private businesses but cater to the fundamental principle of the market economy, which China is striving to build and improve.

The reform arrangement seems to be copied from China's telecommunications reform, although the details may be different. It is possible, therefore, for us to draw lessons from the telecom sector.

In the telecom industry, a common concern is whether the new regulation establishment will take an unbiased stance, because those regulators often come from the previous regime and have various links with the state postal businesses.

People worry that regulators may thwart competition to protect the predominant position of traditional state market players.

Such concerns are justifiable.

As the telecom sector has shown, regulators tend to safeguard the interests of state players, although they are not supposed to act in that way.

As an example, the telecom authorities once forbade the adoption by private businessmen of the IP technology to provide a low-priced and popular long-distance calling service, because it would pose a substantial threat to state companies.

The domestic postal business has grown rapidly and involves huge commercial interests the yearly market value is more than 20 billion yuan (US$2.5 billion).

It remains too early to tell whether state regulators can be detached from departmental interests and encourage legal competition among state and non-state companies.

And the postal law is under revision. There are signs that the private express delivery companies may be put at a disadvantage.

As the postal regulators have much say in the legislation, we must keep alert that they do not manipulate it to the disadvantage of non-state enterprises.

(China Daily September 6, 2006)