You’ve likely heard of “Made in China 2025,” Beijing’s plan to promote PRC global dominance across major and new technology manufacturing sectors such as aerospace, new energy vehicles, maritime engineering, smart grid information, communications infrastructure, and nuclear power equipment. But have you heard of the “China Standard 2035” project?

Objective

Beijing seeks to capture broad, global commercial and security advantages through “China Standard 2035.”

    Implications

    This new PRC strategy creates risks, challenges global commercial priorities of facilitating technical interoperability.

      Actions

      Both private sector and government can balance risks through education, engagement, strategic review, and market-oriented coalitions.

        BEIJING’S AIM TO CAPTURE BROAD COMMERCIAL, SECURITY ADVANTAGES

        Few outside of PRC and global technical standards setting circles have heard of “China Standard 2035,” this new strategic plan that seeks to:

        • Expand China’s leadership and influence within the global market-based consensus entities that set sectoral and international technical standards.
        • Increase China’s control over the direction of fundamental engineering standards governing everything from industrial processes and components to entire critical global infrastructures of information and communications technology, transportation logistics, and energy.

        The PRC’s goal for “China Standard 2035” is for Communist Party of China (CPC)-controlled agency and enterprise personnel to increasingly dictate those standards, allowing Beijing to capture broad commercial and security advantages.

        CPC General Secretary Xi Jinping states that standards are the “first chess move” in the projection abroad of PRC enterprises, industry and equipment, and calls for strengthening the CPC’s “leadership over standardization work” and the “hard power of China’s Standards,” according to a 2016 article by the director of the Standards Administration of the PRC (SAC).

        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.

        PRIVATE SECTOR & GOVERNMENT CAN TAKE ACTION TO LOWER RISKS

        Both government and private sector have reason to focus attention and effort on “China Standard 2035” to lower the risks to commercial and national security from the increased control of global communication and information flows that “China Standard 2035” aims to provide to the PRC. Steps to consider taking now include:

        • Educate leadership. Decision makers need a better understanding of what “China Standard 2035” seeks to accomplish, how this affects their organizations, and which sectoral or international standards setting organizations affect their areas of operation.
        • Get engaged. Industry and government practitioners should actively participate and lead within these organizations to ensure standards are being set with interoperability and ultimately an open global economy in mind. PRC officers and chairpersons who are participating in standards setting organizations act in coordination with Beijing’s plans, including “China Standard 2035.”
        • Review existing strategies. Leadership teams, both governmental and commercial, should consider what the consequences of PRC control over standards will have on their organization’s economic, technology, and information security, and whether or not their entity will be vulnerable to limits imposed by changes to security standards that might occur in the United States or elsewhere as a consequence of “China Standard 2035.”
        • Build like-minded coalitions. Leadership teams should consider building support for national and international collective action within industry associations and government bodies.