If China's mixture of state-directed investment and quasi-market economics can put an astronaut into space, you can bet it expects to get a 3G mobile network up and running using homegrown technology. Where the indigenous model runs into trouble is when listed telecommunications carriers are asked to achieve policy goals, keep earnings growing and pay dividends all at the same time. The authorities have an unorthodox plan, however, to recalibrate the competitive playing field. Reports suggest a merger and acquisition upheaval where the nation's No2 mobile operator, China Unicom, is sacrificed to make competition less brutal for the survivors. That such draconian action is being mulled over at all highlights just how high the stakes are. The mainland's call on 3G, after all, will have impact reaching far beyond its borders. With more than 334 million mobile users in the world's largest market, technology vendors and handset manufacturers globally will be watching. China not unreasonably wants its fledgling technology firms to get a piece of the huge 3G build-out - especially after its 2G networks were built almost entirely by foreigners. Last year telecoms-related fixed-asset investment in China reached 210 billion yuan and is likely to balloon with 3G spending. Nor is it keen to pay billions in royalties to United States-based Qualcomm, owner of most intellectual property associated with WCDMA and CDMA2000, the two 3G global standard platforms. Hence China is aggressively advancing its own unproven 3G standard, TD-SCDMA, which could also create potentially lucrative export markets. But critics say China risks wasting enormous resources on a politically motivated technological platform that may prove less viable than the foreign 3G standards already established. The controversy over 3G standards has a worrying parallel with the muddled inception of China Unicom, when attempts to appease all sides left it encumbered with running both the European-backed GSM and Qualcomm's American alternative, CDMA. Ironically, Beijing may now choose to eliminate Unicom in order to shrink the number of new 3G carriers to three. The spoils of its mobile and fixed networks would be divided between China Netcom and China Telecom. Keeping the field small, the thinking goes, would limit the total construction bill for 3G networks while boosting industry returns. As fixed-asset investment was 40 per cent of overall telecoms revenues last year - more than twice figures in mature markets - China would be right to seek ways of rolling out 3G while reducing the flow of investment into the sector. But unless handled carefully, the death of China Unicom would translate into pure regulatory risk on the spreadsheets of foreign portfolio investors, upon whose largesse mainland telecoms may need to rely to complete the development of China's 3G. It might be argued that 'shock therapy' is exactly what China's telecoms sector needs before it can manage without consistent meddling from the state. Yet unless technology decisions are allowed to become wholly commercial ones that still looks premature. One can force companies to build a network, but consumers - even in China - cannot be forced to buy the phones that use it.