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June 15, 2021updated 23 May 2022 8:47am

Technical standards-setting is shaping up to be the next China-US showdown

The west has typically pioneered global technical standards, but China is aiming to dominate the next wave of emerging technologies.

By Laurie Clarke

In China’s Standards 2035 plan, unveiled last year, the country outlined its intentions to dominate the next generation of technologies by taking a pivotal role in setting technical standards. According to Beijing, “third tier” companies make products; “first tier” companies set standards. It wants to be a champion of the latter. 

China’s plan to influence global technical standards has been met with pushback from the US. (Photo by Paul J Richards/AFP via Getty Images)

The plan is seen as intrinsic to China’s ambitions for supremacy in emerging fields such as AI, quantum, the internet of things, 5G and 6G.
Those ambitions reflect the commonly held belief that we are on the precipice of a fourth industrial revolution, says Richard Ghiasy, senior fellow at the Leiden Asia Centre in The Netherlands. “What we’ve seen in the previous three iterations, is that the nation or nations that lead that revolution generally tend to lead the world and the world economy,” he says.

Nations that lead [industrial revolutions] generally tend to lead the world.
Richard Ghiasy, Leiden Asia Centre

Unsurprisingly, China’s Standards 2035 plan has attracted pushback from the US, which sees it as a threat to Western dominance of global technology markets. President Joe Biden has said the US should become more involved in standards-setting – casting it as a bulwark to China’s growing influence and power. As such, digital standards-setting is shaping up to be the latest battleground in the geopolitical tussle between the US and China that increasingly focuses on technology. 

“For two and a half centuries, international technology standards have been an engine for wealth creation and dominance largely belonging to the West,” wrote Shawn Kim, head of the Asia Technology research team at Morgan Stanley, in response to the Standards 2035 plan strategy. “However, this is now changing.”

US vs China: the geopolitics of technical standards

Technical standards allow products to work together across different jurisdictions and manufacturers. A prime example is the USB cable, which replaced multiple different types of cords; another is the plug socket, which takes different forms around the world. If each country or company uses its own standards, technologies are not easily interoperable with those made by other countries or companies.

Usually, standards are set by a consortia of industry-leading companies and international industry associations. Standards can emerge from convention, or the market dominance of a particular supplier, or from formal agreements, depending on the industry and product. China missed the opportunity to participate in the standards-setting of the first wave of technologies, including mobile technologies and internet infrastructure. The current industrial revolution is a chance for the nation to remedy that.

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One of the most successful examples of China’s efforts to play a leading role in standards-setting is 5G. China’s influence on global 5G standards is mediated through the world-leading status of Huawei, China’s national telecoms champion. Huawei is more advanced in 5G than its western competitors such as Nokia and Ericsson or eastern counterparts Samsung and Fujitsu.  

This has made the company an important actor in setting technical standards for 5G. Huawei holds the largest number of “standards-essential patents” required to make 5G work, followed by Nokia and Samsung, according to research provider IPLytics. The company also leads in standards proposals to the 3rd Generation Partnership Project (3GPP), an umbrella group of standards organisations that develop protocols for mobile telecommunications – one-quarter of which have been approved.

Huawei’s indispensability for 5G is reflected in the fact that, although the US has successfully pressured allied countries like the UK and Australia to cut the company’s technology out of their networks, others – including Germany – have hesitated to exclude the company entirely. In another admission of Huawei’s heft, the US allowed American companies to continue working with the company on setting 5G standards after it was placed on a US trade blacklist, for fear that US companies would no longer have a place at the table otherwise. 

But 5G isn’t the only technology that Beijing aims to be instrumental in setting, or updating, the standards for. Chinese navigation satellite systems company, BeiDou, is increasingly competing with GPS, which is owned and operated by the US government. It is more accurate in some regions than existing satellite technology, says Ghiasy, and countries such as Pakistan have shifted from GPS to BeiDou. Ghiasy's research has highlighted e-commerce systems, primarily through the influence of Chinese online shopping giant Alibaba, fintech, and smart city technologies, as areas where China is also exerting considerable influence over standards-setting.    

Another ambitious project approach to rewriting international standards came in the form of a Huawei proposal for a new internet protocol. Huawei claims that it is being developed solely to meet the technical requirements of an increasingly digital world, and has not woven in any particular governance model. But critics have warned it could integrate a system of centralised control into the internet. Countries such as Saudi Arabia, Iran and Russia have reportedly shown an interest in such alternative network technologies. 

Influencing the standards-setting process

One way China promotes its vision for the technical specifications of the future is by increasing its presence at global standards organisations. Chinese officials now lead four such bodies, including the International Telecommunication Union, a specialised agency of the United Nations responsible for information and communication technologies, and the International Electrotechnical Commission, an industry association that publishes international standards for electrical, electronic and related technologies. 

Another means of exerting influence is through China’s Digital Silk Road (DSR) project, a subset of the country’s Belt and Road Initiative (BRI). The DSR focuses on setting up digital or technological infrastructure in partner countries. Smart city infrastructure is particularly popular – according to RWR Advisory, Chinese companies have secured 116 deals to install smart city packages globally since 2013, 70 of which are in BRI countries. 

Through the DSR, China can incentivise countries to adopt its technical standards, making it too costly and laborious for them to shift to different standards later. The initiative combines government powers with industry-leading companies such as Tencent and Alibaba, says Ghiasy. "It is very much a whole-of-government plus whole-of-private-sector approach, and there are some subsidies and some policy facilitation. It is a more powerful combination, a more effective one at lower rates, than what we generally can offer [to countries] here in the West."

Both the US and Europe have baulked at China’s recent push to influence global technical standards. “To some extent, history is repeating itself," says Paul Timmers, research associate at the University of Oxford and former European Commission director for Digital Society, Trust and Cyber Security. "In the '90s, the US was upset that it got bypassed by planned action of European companies in telecoms frequency allocation and realised it had not kept its eye on the ball; today it is both the USA and Europe who painfully realise that to have been naïve or sleeping, while China was moving forward."

Even greater than the geopolitical struggle between the US and China is the battle between two economic models: free-market capitalism and state capitalism. The US hugely benefited from its technological dominance over the past half-century, and the ample investment and political weight that came with that. “However, the US has funnelled the profits from that huge global advantage into private bank accounts of a small number of people, perhaps at the expense of reinvesting in next-generation technology,” says Madeline Carr, professor of global politics and cybersecurity at UCL. “And that is most clearly evident in the reality now that the US has no viable player in the 5G market.”

Writing in the South China Morning Post, Morgan Stanley's Kim observes that China's current approach is not a historical aberration. “Most nations that drove industrialisation did so via capital and government support... Industrialisation in Germany and Japan was top-down driven, and the US semiconductor industry was formed by state funding for military and space projects.”

The US appears keen to redress the recent lack of federal tech investment with a massive chunk of funding poised to be signed off under the US Innovation and Competition Act. But sceptics aren’t certain this will be enough to make up ground in key technological areas where China is set to accelerate ahead. 

The end of interoperability?

Another option is to simply reject China-led technical standards. "Often, in the past, [the fragmentation of the standards landscape] has been driven by stiff competition amongst industry players, keen to see their own standards taken up," notes Carr. "But as technical standards are increasingly recognised as a form of power, it’s not surprising to see governments throwing their weight behind this."

Technical standards are increasingly recognised as a form of power.
Madeline Carr, UCL

China’s approach, and changing geopolitical headwinds, has prompted a shift in Western thinking, with digital sovereignty increasingly becoming a priority. This is highlighted by French president Emmanuel Macron's comments on 5G security, in which he admitted that “sovereign decisions and choices were de facto delegated to telecoms operators". 

A "strategic-partnership approach" to 5G is now emerging in the west, Timmers observes, in which only companies from allied countries are entrusted with sensitive digital architecture. He warns that this could lead to fragmentation in the development of 5G, possibly leading to a split into two blocs centred around China and the West, and the demise of international standards bodies like 3GPP. 

Timmers argues that in this event, there may be no hopes for a global 6G: "6G is the harbinger of such fracturing, and it is quite well possible that next to the splinter-net we will see a ‘splinter-6G’ and a ‘splinter-IoT'." 

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