ECONOMIC, NATIONAL SECURITY IMPLICATIONS FOR THE U.S. & OTHERS
PRC state media has reported that “China Standard 2035” will be presented to the Central Committee of the CPC in January 2020. This suggests further elevation of the project publicly will follow, such as publication by the PRC State Council and mentions in top leader speeches at the next National People’s Congress, likely in March 2020. Nevertheless, the groundwork to promote PRC technical standards globally has already been laid out, led by the newly elevated SAC within the State Administration for Market Regulation (SAMR).
PRC media reports on “China Standard 2035” boast that Beijing has recruited and/or taken over much of the committee and organization leadership of key global and U.S. national standards bodies such as the International Organization for Standardization (ISO), the United Nations’ International Telecommunication Union (ITU), and the International Electrotechnical Commission (IEC). The American National Standards Institute (ANSI), a Washington-based nongovernmental organization, has developed a close relationship with PRC government institutions and CPC officials, judging from reports in both PRC media and posts on ANSI’s official website.
When the PRC Ministry of Industry and Information Technology (MIIT) published its 2018 standards revision plan, it overwhelmingly favored and adopted PRC-set standards; less than 2 percent were existing international standards. This is an indicator of Beijing’s determination to use and have others adopt its own standards. In 2018, Beijing also dedicated nearly one-quarter of its national translation budget to making PRC standards available in foreign languages.
These PRC actions point to Beijing’s emphasis on controlling standards to support CPC geostrategic priorities rather than global commercial priorities of facilitating technical interoperability, the latter being the original, market-based objective for global consensus standards setting. This is new, noteworthy, and potentially troubling for industry and government. It suggests the PRC seeks to gain first mover advantage in global markets for critical emerging technology, energy, transportation, and logistics at the expense of commercial, or private, competition from the United States and its allies.
Take the rail industry, for example. Beijing is already able to promote state-controlled railway enterprises through subsidies, as well as through tariff and nontariff barriers, allowing rail and other PRC companies to underbid others overseas. If the PRC also set the global standard for railway rolling stock and rail infrastructure, it would exponentially increase its ability to monopolize relevant markets—as “Made in China 2025” essentially calls for—by either limiting participation of other suppliers through denial of access to physical equipment and technologies or by requiring high premiums for access.
The threat extends beyond the bottom lines of U.S. and other companies. The rail example also becomes a national security matter when you consider that railway systems are now part of the smart manufacturing and logistics infrastructure, which will increasingly be linked digitally. PRC violations of U.S. company and government IP, supply chains, and information are virtually guaranteed by Beijing’s cybersecurity and counterespionage laws, which require all firms operating in or with connections to the PRC to share any information with the PRC government when requested and to share source codes with Beijing security authorities. Similar threats apply across information and communications technology, and other “smart technology” sectors where the PRC is a current—or potential future—major supplier.