The purpose of this paper is to analyze why no FDI has entered basic telecom services in China despite relaxed government policy after WTO accession in 2001. A new barrier indicator incorporating the policy and non-policy impediments is developed with multiple sources of data including a first-hand survey. Scoring and weight assignments are conducted through expert interviews to strengthen objectivity. Results indicate that there is no significant reduction in the actual level of restriction，largely attributable to the recessive non-policy factors. Policy implications are discussed.