BEIJING'S attempt to grab back control over its telephone and data networks is proving less smooth by the day. It was prompted by the spate of reports in the first quarter of this year by small companies, many unknown in their own backyard, that said they had joint ventures to build or upgrade various types of networks. However, the blunt re-statement of the official line - that foreigners would not be allowed to take equity stakes in networks - has done little to clear up the position. Some of the companies have shown no signs of backtracking on their projects, saying that a contract with a provincial authority with access to a radio frequency is enough, and no authority from Beijing is needed. As in other areas, if provinces or even towns choose to ignore Beijing, the centre's options are limited to sending in the People's Liberation Army or doing nothing. Instead of reasserting control, the main impact of the statement has been to focus attention on the problems of funding China's ambitious plans to install 75 million lines and other state-of-the-art equipment by 2000. The analysis by Andrew Harrington of Salomon Brothers shows the difficulty of funding this development - and this is ignoring the investments in energy, transport, healthcare and other areas that are getting equal treatment. Beijing has long kept telecommunications firmly under state grasp, and it is easy to understand why. When the tanks rolled into Tiananmen Square on June 4, 1989, pro-democracy activists made good use of fax machines and similar equipment to tell the world their side of the story and organise escape for those most under threat. The events of that day cemented the policy split between economic freedom and political control. Communications falls in both spheres. So any policy on foreign involvement will have inconsistencies. Beijing is faced with a stark choice. Make telecommunications an economic activity and let it serve the needs of business, or keep it in the political realm and watch the ancient network cripple other sectors of the economy.