Most attempts to interpret the rapidly shifting world of telecommunications make the mistake of viewing the balance of power as bi-polar.

The North Americans pretty much invented the internet and so are better at fixed-line communications than anyone else. The likes of Lucent, Cisco and Nortel dominate as manufacturers, just as operators, such as WorldCom or Global Crossing, export fixed-line service expertise.

On the other hand, the Europeans have carved out a reputation as masters of the wireless world. Thus, higher mobile phone penetration rates have helped Nokia and Ericsson climb to the top of the markets for mobile handsets and infrastructure. Vodafone remains the largest international operator.

There are plenty of exceptions, of course. Motorola, the US cellular giant, has recovered from a crisis of confidence that followed the collapse of its satellite phone venture Iridium to once again challenge Nokia for leadership of the world handset market. European manufacturers, such as Alcatel, Siemens and Marconi, are no slouches when it comes to wires and switches.

Nevertheless, the perception persists that America still does not get the wireless internet while Europe's protected phone monopolies are preventing it from wiring up for the real PC revolution.

Apart from the crudeness of such analysis, it ignores Asia, the fastest growing telecoms market in the world.

In recent years, Asian telecoms had looked rather like a sleeping giant. The richest market, Japan, was highly advanced but its decision to pursue a separate technology path for mobile phones prevented both operators and manufacturers from realising their potential abroad. NTT sheltered under the protection of some of the highest fixed line tariffs in the developed world.

Yet, the last six months have seen some dramatic shifts. NTT DoCoMo, NTT's mobile phone arm, has established an early headstart in the race to encourage customers to use their handsets for more than just voice calls.

DoCoMo's packet-switched i-mode technology proves that the wireless internet is more than just a pipedream and shows what can be achieved when operators move to similar packet-switched systems - which unlike circuit-switched networks offer an "always on" capability - in Europe and the US.

More importantly, DoCoMo has demonstrated the first signs of its ambition to exploit this advantage abroad. It has taken minority stakes in British and Dutch operators, and hopes to show the Europeans some of the joys of i-mode before long.

Even DoCoMo's overly-cautious parent has finally taken the plunge with a controversial bid for Verio, a US internet company, despite criticism that NTT's domestic market remains over protected.

Western eyes have also turned to Hong Kong, where Li Ka-shing's Hutchison Whampoa has proved that conglomerates can be nimble too. Hutchison's profitable sale of Orange in the UK may have led many to conclude it was a trader rather than an operator, but the subsequent re-entry into the British market for a far lower price was one of the great surprises of the third generation mobile phone auctions.

In the world of fixed-line internet, the Li family has been busy too. Richard Li's audacious takeover of Hong Kong Telecom using the over-inflated shares of Pacific Century CyberWorks arguably marked the high point (or low point) of the dotcom investment bubble in a far more dramatic way than the merger of America Online and Time Warner.

Yet, the potential of both Japan and Hong Kong to capture the imagination of investors is dwarfed by their giant neighbour China. It is here, in a country of 1.3bn people, that the scale of the worldwide revolution in communications becomes apparent.

When China's ministry of information wanted to improve communication links to the far-flung rural provinces of western China and Tibet, it could not afford to hire thousands of mechanical diggers to lay the enormously long fibre optic cable required. But it could turn to the Peoples Liberation Army and use thousands of troops to dig trenches over the Himalayas by hand in an act of human endurance that is reminiscent of the construction of the Great Wall.

Similar heroic efforts are taking place in India, where the government is encouraging companies to lay fibre optic cables alongside the vast railway network - re-using older communication routes in just the same way as the canals, motorways and electricity grids have helped string uninterrupted fibre across Europe. But size is not everything. What differentiates China is the relative wealth of its teeming masses.

In the eastern cities at least, Chinese middle classes do not just offer the potential to become the world's most valuable telecoms market - they already are.

One mobile phone operator alone, China Mobile, is adding around 2m new subscribers a month and should shortly overtake Vodafone as the world's biggest operator before it even ventures abroad.

Overall penetration rates remain tiny, but the 59m mobile subscribers across China today buy more equipment from multinational suppliers such as Ericsson, Motorola and Nokia than any market outside the US. All three are investing at breakneck speed in the belief that China will not be number two for long.

Technology is catching up, too. By requiring Western manufacturers to enter into joint ventures with local companies and build factories in China, the communist government has skilfully copied many of the high-tech electronics essential to modern telecoms infrastructure.

Returning Chinese emigres from America, Hong Kong and Taiwan are joining others who were educated abroad to create a vibrant entrepreneurial culture ready to exploit this know-how to build innovative technology companies of their own.

Regardless of their public confidence in Chinese government promises to keep the door open, this is a serious threat to the supremacy of European and US manufacturers.

Opportunities

Even if Chinese technology, such as the third generation mobile phone standard TD-SCDMA, remains less than cutting edge, adoption by giant operators, such as China Mobile, will always guarantee it a place on the world stage.

The opportunities for US and European operators to break into the long-protected Chinese market also look limited. Despite China's accession to the World Trade Organisation, the government retains the power to prevent foreigners from taking majority control of any domestic phone operator.

When even Hong Kong operators such as the enviably well-connected Mr Ka- shing are still treated as outsiders, it is hard to see what chance Vodafone or AT&T have to make a serious impact on the mainland.

Government attempts to control internet content for political reasons will also hamper the growth of foreign content providers - as one US website recently found to its cost when it accidently referred to Taiwan as an independent country and was rumoured to be blocked for months in retaliation.

Censorship of the internet may also hold back China's economic growth in the short term, but there are enough internet-savvy managers at the top of the industry to ensure that Chinese politics does not interfere with the money-making too much.

Edward Tian, the entrepreneurial chief executive of state-owned China Netcom, is typical of the new breed whose vision of the future demand for broadband internet access is just as optimistic as any found in Silicon Valley. His company is building fibre optic networks with a zeal that would make many traditional operators in Europe blush.

All of this takes money, of course, and the future of companies such as China Mobile and China Netcom depends on their ability to raise investment funds on the international capital markets.

So far, investors in Hong Kong and New York have fallen over themselves to throw money at China despite primitive corporate governance and limited transparency.

In future, the enormous and simultaneous demand for capital from the globalised telecoms industry could hinder those who are not prepared to play by the rules of the global markets.

Yet, Chinese operators are in a no worse position than many other cash-strapped companies anxious to secure funding before the tap runs dry.

If only the biggest survive the shake-down, then China cannot be ignored for long.