Whether it is data or copyright, the Internet of Things or privacy, the EU and the US must agree on a common path for technology policy – centered on shared values like democracy, the rule of law, and freedom of speech. Otherwise, China, with its focus on mercantilism and restricted freedom of information, will soon be dictating the terms of trade in the world's fastest-growing economic sector. If open and pluralistic societies do not stand up for an open Internet and market-based trade, who will?
The Foreign Investment Climate in China
Rob Atkinson testified before the U.S.-China Economic and Security Review Commission at a hearing on the foreign investment climate in China. Atkinson noted that since President Xi Jinping assumed power in 2012, China has rapidly accelerated its efforts to promote “indigenous innovation” not just using the “carrot” to help Chinese firms but also the “stick” to harass foreign producers, to the detriment of the American economy and the global innovation ecosystem. Further, absent concerted action soon by the United States and its global allies, we will have to live with the long-term negative consequences of China’s actions on the U.S. economy and national security capabilities.
Mobile Telecom Offers Enormous Benefits, Finds New Report
Rapidly advancing technology and strong investment has meant that mobile technology use has exploded around the world in the past 5 years. This technology has brought substantial benefits to rich and poor users alike, and has also been a key factor in small and medium-sized business growth.
The Middle Kingdom Galapagos Island Syndrome: The Cul-De-Sac of Chinese Technology Standards
China has made the development of indigenous technology standards, particularly for information and communications technology (ICT) products, a core component of its industrial development strategy. China has done so believing that indigenous technology standards will advantage China's domestic producers while blocking foreign competitors and reducing royalties that Chinese firms pay for foreign technologies. But, by using indigenous rather than global technology standards for ICT products, China risks engendering a “Galapagos Island” effect that isolates Chinese ICT products, technologies, and markets from global norms, as Japan experienced to the significant detriment of its ICT sector.
This report explains why the development and adoption of global, interoperable technology standards matters. It then explores Japan’s experience with the “Galapagos Island Syndrome,” explaining how that nation’s isolation from global technology markets ultimately inflicted significant damage to an industry that had once been among Japan’s most vibrant.
The report then turns to examining China’s standards development approach and identifies four central shortcomings: 1) it risks picking the wrong standard; 2) it risks delays in standards development (often caused by bureaucratic inefficiency or rivalry) that cause both missed market and economic growth opportunities; 3) it encourages a belief that Chinese markets alone are of sufficient scale; and most importantly 4) even when and if it does succeed in developing indigenous standards, it risks the Galapagos Island effect that isolates China’s ICT products and markets from global ones.
The report concludes by offering recommendations for how China can improve its approach to standards development in a way that benefits China’s ICT enterprises, China’s consumers of ICT products, and even the broader global economy. Among other recommendations, it notes that:
- China should adopt an “open participation model” in product standards development processes and frameworks that is transparent, open, and non-discriminatory for all stakeholders.
- China should remove policies that inappropriately withhold access to standards-development organizations (SDOs) or other Chinese standards-making forums based on where a company or organization is headquartered.
- China should align its standards (including national, industrial, and provincial standards) with international standards and use international standards as the basis of Chinese standards and regulations wherever practical. China should not make minor alterations to existing international standards with the intent of developing a China-only standard.
- Technology that is not developed or registered in China should still be considered for inclusion in Chinese standards.
- Wherever the majority of the rest of a global industry sector has developed a voluntary consensus standardization forum as the preferred venue for the development of certain ICT standards, Chinese industry should join the rest of the sector in the development and use of those standards.