China’s ‘state-centric approach’ to technical standards-setting worries EU firms

  • The West has long had a lead when it comes to global technical standards, setting the specifications that shape most of the products consumers use
  • European Union Chamber of Commerce in China report says China’s ‘state-centric approach’ to standards will add to risks due to increased politicisation and potential decoupling

Technical-standards setting has arisen as the new battleground in superpower rivalry, with challenges posed by China’s rise also a “wake-up call” for Europe, an EU business group has warned.

In contrast with the free-market driven practices in the West, China’s “state-centric approach” to standards will likely add to the risks of increased politicisation and a decoupling from international technical measures, the European Union Chamber of Commerce in China said in a report released on Thursday.

“There has been a decent amount of complacency in Europe, which sees itself as a champion of standards setting … but China has a different approach and a different speed in this field and Europe needs to wake up to this fact,” says EU Chamber president Joerg Wuttke in the report.

The West has long had a lead when it comes to global technical standards, setting the specifications that shape most of the products and services that consumers use every day, from toilet paper to telecommunication protocols.

However, even though China is a latecomer, its influence within the existing international standardisation system has risen in recent years, with Beijing well aware that the area is central to China’s economic transformation and efforts to move up the global value chain.

China has already gained an advanced position in many strategic and new technology sectors, such as 5G mobile technology and artificial intelligence – and many would argue that as such – it should lead in technical standards in these areas.

“[We] should actively participate in international standardisation activities, to contribute ‘Chinese wisdom’ towards optimising global standards governance,” said Tian Shihong, deputy director of the State Administration for Market Supervision and director of China’s National Standards Committee in October.

However, the EU report alleges that China has gained the upper hand in these sectors through systematic state support.

“Technical standards are by nature non-binding, private and self-regulatory, providing interoperability” to reduce friction and facilitate trade, according to the report.

As such, there is increasing concern that Beijing wants to promote its own standards as opposed to playing a constructive role within the established system.

“China is exporting its state-centric standardisation approach internationally … [as such] there is a risk of bifurcation, fragmentation or a decoupling from international standards, not least in the context of standardisation activities as part of the Belt and Road Initiative,” the report states.

The report’s publication comes at a time of growing friction between the US and China over a range of trade, tech and political issues, despite recent efforts by both sides to de-escalate tensions.

There have been rising concerns among some economic commentators that these areas of conflict could see China decouple from the West in many strategic technology sectors, and that this may spill over into technical standards.

Beijing in October released a national strategy for technical standards to map out how the country can become a global standardisation powerhouse. The US-EU Trade and Technology Council, formed in September, has also put technical standards at the top of its agenda.

“Technical standards are the new battleground in the power struggle between different countries, primarily the US and China,” said Tim Rühlig, research fellow at the Swedish Institute of International Affairs and co-publisher of the EU report.

“If China gets stronger [in international standards], there is a risk that this could come at the cost of European influence.”

However, the report notes that Beijing’s new strategy has vowed to give a greater role to industry actors in the development of technical standards, with a promise to further open domestic standards-setting to foreign companies.

“[China’s new standardisation strategy] might see further positive developments, but whether it will precipitate fundamental change remains to be seen,” said the report.

Other Western think tanks have expressed scepticism over Beijing’s new strategy.

“This growing role for industry players must be placed in the context of a Chinese party-state that is asserting greater control over Chinese companies, particularly technology companies,” research fellows at the Washington-based Carnegie Endowment for International Peace said in October.

“This greater role for industry actors should be seen not as a shift away from the state, but rather as a way of bolstering the capabilities of the state-centred standards system,” they said.

China’s new plan also sets a specific target to align 85 per cent of its domestic standards with international standards. However, this move also attracted scrutiny in the EU Chamber report.

“You can always go to tweak it, and you can tweak it quite significantly, and then say it’s based on international standards. But what would really be crucial is if China committed to identical adoption [of global standards],” added Rühlig.

The report recommends that China provide fair and equal treatment for all companies that want to engage in domestic standardisation activities, and accept the premise of the International Organisation for Standardisation and the International Electrotechnical Committee.

It also advises Beijing to think twice about what it calls China’s “civil-military fusion”, which will likely damage China’s international reputation and the future influence that it may hold over standards setting.

Meanwhile, Wuttke called on the European business community to invest more in “the battleground of the future” as Beijing’s standards-setting activities would likely continue to rise given its huge market, growth potential and focus on shifting up the value chain.

Author: Orange Wang, SCMP

You might also like