- The Chinese government is likely to formally introduce a new industrial policy blueprint, China Standards 2035, this year after three years of planning.
- China hawks worry that a coordinated, state-led effort to increase China's influence in global standards-setting bodies will serve as a powerful new industrial policy weapon.
- But many industry experts say that proposed standards succeed or fail based on technical merit and that standards bodies are highly resistant to undue influence.
China Standards 2025 is a new effort to promote Chinese leadership in key emerging technologies like 5G, autonomous vehicles, and artificial intelligence. China hawks in Washington, Brussels, and Tokyo see the plan as a new weapon in Beijing's industrial policy arsenal, building on traditional tools like subsidies for national champion companies or discriminatory treatment of their foreign rivals. The Chinese government's ambition to influence global technology norms and practices is also evident in digital privacy legislation and the central bank's development of a blockchain-based digital currency.
Standards are power
Technical standards allow dispersed industry participants to produce interoperable products and services, and they influence wide range of products: light bulbs, electrical sockets, railway gauges, power transmission equipment, computer hardware, and 5G telecom networks. Broad adoption of USB, for example, enabled USB ports and USB-compatible devices to replace a bewildering variety of earlier hardware interfaces. Decisions on technical standards occur through international bodies comprised primarily by industry representatives. Important standards-setting bodies include the International Telecommunications Union (ITU), the International Organization for Standardization (ISO), the International Electrotechnical Commission (IEC), and the Third Generation Partnership Project (3GPP), which sets standards for 5G.
Though not yet published in full, the broad outlines of China Standards 2035 are already clear. The plan calls for Chinese companies to increase their representation on standards setting committees, in terms of personnel, and to increase their substantive participation in standard setting, in terms of proposing standards for international adoption. Beijing is also using the Belt and Road Initiative (BRI) to promote Chinese technical standards. Several bilateral memorandums of understanding on the BRI call for cooperation on technical standards.
Global policymakers have taken notice of China's ambitions. EU Internal Market Commissioner Thierry Breton warned in June that “the EU's key trading partners are very active in developing international standards in key markets to protect and increase their competitive advantage.” His statement was a response to a Chinese proposal to the ISO to establish a committee on standads for production of lithium, which is used for advanced batteries in electric vehicles. A former Japanese trade minister, Aka Amari, similarly warned in April about a Chinese proposal to the ISO for smart cities, calling it a “trap” that would allow China to harvest data from systems built under the proposed standard.
For China hawks, Beijing's standards push raises two related concerns. The first is that Chinese companies will gain commercial advantage. Companies that own so-called “standard-essential patents” often earn significant royalties, since other industry participants must use this technology to comply with the standard. The second concern is that given Beijing's influence over even privately owned Chinese companies, the Communist Party will be able to exploit the international adoption of Chinese-developed standards to collect data, install backdoors, and embed authoritarian values into technological ecosystems.
Hype vs reality
Much as with the worries over Huawei, disentangling legitimate national security concerns from paranoia is difficult, especially for policymakers who lack an understanding of the underlying technical issues. Many industry participants say that standards-setting bodies make decisions based on technical merit and that attempts to “game the system” are unlikely to succeed. In addition, the degree to which adopting a China-proposed standard delivers a clear competitive advantage to Chinese companies varies significantly based on the specific industry context.
Indicators like patent filings and submissions to standard-setting bodies suggest a trend of rising Chinese influence. But industry experts counter that such indicators are often too crude to be meaningful. Most patents turn out to be irrelevant, and most submissions are rejected. And much as with other Chinese industrial policy initiatives that offer subsidies for discrete activities that ostensibly advance a broader objective, China's standards campaign tends to incentivize pointless box-ticking behaviors, like submitting irrelevant proposals that are certain to be rejected. Some standards bodies have found their agendas bogged down by the need to process a flood of dubious Chinese submissions.
In autonomous vehicles, for example, China has arguably put the cart before the horse by seeking to develop indigenous Chinese standards before industry players have the opportunity to test their practical viability for developing actual products and services. China's work on technical standards for autonomous vehicles has not significantly enhanced the Chinese industry's overall competitiveness, according to research by Naomi Wilson, senior director for Asia Policy at the Information Technology Industry Council.
The risk for China is a repeat of TD-SCDMA, the Chinese 3G mobile telecom standard that is now widely regarded as a costly boondoggle. In their zeal to promote a homegrown standard, policymakers poured billions into TD-SCDMA, and regulators forced China Mobile, the country's largest domestic carrier, to adopt it, even though the carrier would have preferred the proven international standard, W-CDMA. The Chinese standard never succeeded in winning international adherents. In contrast, US policy and industry norms encourage industry to test various technologies to determine which are commercially viable before promoting one as a standard.
Though the domestically-focused elements of China Standards 2035 have received less international attention, most of the plan will focus on domestic standardization. This focus reflects the heavily regulated nature of Chinese commerce and the role that standards play in implementing regulation, especially in areas like cybersecurity. The domestic focus also reflects the persistence of regional protectionism by provincial and city officials seeking to promote local champion companies.
The Chinese government began work on China Standards 2035 in 2018, and the full plan will likely be published this year. The Standardization Administration of China, a sub-agency of the State Administration of Market Regulation, is leading the effort, with the Chinese Academy of Engineering and other state-run think tanks participating. The plan follows legislative revisions to China's Standardization Law in 2017.