The outline for the China Standards 2035 plan has startled standardization experts around the world. Notwithstanding the fact that the plan is a research project and the Chinese government has not yet reached a decision, it has become clear that the People’s Republic has discovered standardization as an instrument of industrial, geostrategic and power politics. This has far-reaching consequences that also impact upon Europe.
China’s aim is to become the world leader in technology by 2049, the year in which the People’s Republic will celebrate its 100th anniversary. The Middle Kingdom is expected to have established itself as a world power in key technologies such as artificial intelligence (AI) as early as 2030. It is already the world champion in patent applications. At the same time, the government in Beijing has recognized the power of setting standards in order to assert its bid for technological supremacy.
The Communist government has adopted a multi-pronged approach. It is harmonizing the country’s standardization system, placing growing numbers of Chinese experts in senior positions in international standards bodies such as ISO and IEC, and attempting to export its own standards through the New Silk Road (Belt and Road) initiative to the participating countries, particularly in Africa, Asia and Europe.
The standards race is about prestige, but also profit. Whoever owns the standard owns the market, as Werner von Siemens notably said. In addition to influence upon the direction of industrial policy, licence fees are also a factor. Since to date, the majority of proprietary standards in the technology sector have been created by foreign companies, China is the world’s second-largest payer of licence fees.
Early industry standards were set primarily by European countries, including Germany. Standards for the Internet are primarily set by bodies located in the USA, such as the Internet Engineering Task Force (IETF) or the World Wide Web Consortium (W3C). Beijing aims to lead the way in the Internet of Things (IoT), Industry 4.0 and other technologies of the future, such as e-mobility.
The groundwork for the new strategy has been performed primarily by the Chinese Standards 2035 research project. The parties involved, including the Standardization Administration of China (SAC), the Chinese Academy of Engineering, and universities and research institutes, addressed for example the question of how the standardization system could support political objectives. They presented their findings to China’s State Council in early 2020.
The principal recommendations are that a Chinese standardization strategy be developed and that the previous five types of standards be reduced to two: those of national relevance and those of global relevance. The latter are to be developed by relevant institutions or associations and technology alliances. The parties to the project further recommended that the quality of Chinese standardization activity be improved and a standardization forum for the New Silk Road be established.
The project group has not yet published an official concluding report, nor has a government resolution appeared for a programme based upon it. According to reports however, an unpublished paper on the topic is being discussed in the State Council as a template for a national Chinese standardization strategy.
The Chinese embassy in Berlin has declined to comment directly. It has referred instead to the SAC’s website, on which a work programme for national standardization activity in 2021 was published in April by the standards institute. The programme comprises 90 points and work requirements, and represents the beginning of the plan term up until 2025. It accords a stronger role to standardization, for example in reducing CO2 emissions and revitalizing rural areas. Standardization is also to be promoted at various levels, with improved coordination between regions and sectors. The SAC is also calling for greater participation in international standardization activity, for national and international standards to be harmonized, and for cooperation in this field to be stepped up.
The reality is that China’s applications for standardization at both ISO and IEC have grown by 20 percent in recent years. In 2019, the People’s Republic submitted a total of 238 proposals for international standards to these bodies. In the same year, it submitted 830 technical documents to the International Telecommunication Union (ITU), more than the next three countries – South Korea, the USA and Japan – combined. The proposal for a new Internet protocol (“new IP”) by network supplier Huawei, which is at the centre of the 5G security debate, raised eyebrows in the West: China is seeking to make its model of a state-controlled network – one in which mass surveillance and filters are a feature, not a bug – acceptable, warns Sibylle Gabler, Head of Government Relations at DIN. In addition, Chinese companies are for example using the ITU to drive forward the standardization of biometric facial recognition, which is no less controversial.
In principle, Gabler welcomes the fact that the Middle Kingdom is becoming more involved at ISO and IEC. As she points out, transparency is assured in these organizations, and all experts worldwide have the opportunity to present their interests. “This is of course much more constructive than China attempting to establish its own standards globally. It is important however that the international standards are then also adopted and used unchanged by everyone.” And therein lies the problem: according to the German Mechanical Engineering Industry Association (VDMA), China implemented ISO and IEC standards at the low level of 35 percent in 2010, and in 2019 the level of adoption had dropped further to 24 percent.
Gabler sees the People’s Republic as having “all the factors needed for it to be very successful with its standardization programme”: clear political goals, an understanding of standardization as a geopolitical/strategic instrument, and excellent technical experts of its own. The challenge here is that the Western tradition of standardization allows for a grass-roots approach, i.e. one in which the business community and other stakeholders set the agenda. This philosophy ensures that projects are close to the market. “It reaches its limits, however, when other regions take a powerful top-down approach.”
According to Gabler, “China’s array of standardization activities, at both national and international levels, coincides with limited resources on the part of European experts.” Should nothing change in this respect, “our influence in international standardization activity will diminish in the coming years”. Germany is still well positioned at present in terms of the secretariats and chairs it holds at the ISO and IEC.
“However, we are very much enjoying the fruits of past decisions,” warns Gabler, speaking as an insider. “Applications to fill new and vacant positions are now often submitted from other quarters. German experts are not always present in projects that are of strategic political importance.” Government bodies must help to “counterbalance the huge subsidies in China,” she said. Initiatives such as the German Standardization Roadmap on Artificial Intelligence, published in 2020 by DIN and industry associations in conjunction with the German Federal Ministry of Economic Affairs and Energy (BMWi), should be expanded to include areas such as the circular economy and hydrogen.
“Rather than disconnected measures, we need a strategic approach to our dealings with China,” says Simon Weimer, technical advisor at the Federation of German Industries (BDI). “Standards must be core elements of a European strategy on China.” German industry is very concerned by the wealth of proposals for international standards emanating from the People’s Republic. The BDI considers this to be “a strategic approach, intentional on the part of policymakers”, in which Beijing is investing large sums of money in order to exert selective influence on certain fields of technology. Europe is finding it more and more difficult to keep pace by the use of its own resources.
“Should a Chinese standard become established on the market, a risk exists of demand for German and European technologies falling, and innovative capacity and competitiveness thus being lost,” Weimer points out. “The EU must recognise the economic and political importance of standards and join with industry in working on a forward-looking strategy.”
Thomas Zielke, head of the standardization policy unit at the BMWi, intends to continue monitoring the situation: “At this stage, we do not expect the strategy to impact negatively on opportunities for German companies in China or on bilateral dialogues on standardization.” However, the department is taking a critical view of the New Silk Road, which could lead to national Chinese standards spreading to other countries, something that would contradict the approach of an international standardization process and thus be detrimental to China itself.