That must be done through clear and consistent copyright protections. They’re a prerequisite to outcompeting China for influence in standards innovation and international SDOs, which will determine who wins the competition for emerging technology leadership.

Sujai Shivakumar, “Securing Global Standards for Innovation and Growth,” Center for Strategic and International Studies, 01-27-2022, https://www.csis.org/analysis/securing-global-standards-innovation-and-growth

China’s Growing Influence in Technology Standards

Chinese policymakers often invoke the perspective that third-tier companies make products, second-tier companies design technology, and first-tier companies set standards. They understand the strategic importance of foundational standards and are working to influence the development and deployment of standards in key economic and trade sectors. A 2015 article in China’s Zhejiang Daily states, “Standards are the commanding heights, discourse power, and the power to control. The one who obtains the standards gains the world.” This rhetoric emphasizes the value placed on standards for establishing China’s technological position in a variety of emerging domains.

China’s determination to dominate standards extends to controlling communications and discourse. Linking internet governance and standards, Chinese president Xi Jinping has stated that in cybersecurity and telecommunications, the “game of great powers is not only a game of technology but also a game of ideas and discourse power.” Developing standards for the digital economy therefore also requires reference to standards for political expression.

These ambitions are reflected in the proposed China Standards 2035 plan. This plan complements the earlier Made in China 2025 strategy, which invested heavily in developing and manufacturing technologies such as fifth-generation (5G) wireless networks, connected devices, and industrial automation. It also sought to establish China’s lead in areas such as autonomous systems, batteries, solar cells, and other green technologies.

China’s standards strategy also seeks to influence the direction of licensing fees. At present, China is the world’s second-largest payer of licensing fees in the world, since most proprietary standards in the technology industry are currently created by foreign companies. China Standards 2035 seeks to reverse this relationship and make China a net recipient of licensing fees for standard essential patents (SEPs).

To ensure that China will be positioned to dominate the market for emerging technologies, the 2035 standards strategy seeks to increase the quantity of Chinese-owned intellectual properties that are identified as SEPs and to have Chinese technical inputs influence the setting of international standards so they favor the commercial interests of Chinese enterprises. The plan calls for creating new domestic standardization research institutes, certification centers, and more than 50 “standards innovation bases.” The strategy also features new prizes and subsidies to encourage Chinese researchers and companies to cooperate in developing new China-based standards.

China has also sought to increase Chinese representation in leadership and rapporteur positions at top SDOs such as the International Telecommunication Union (ITU), raising concerns about the integrity of standards setting. CSIS experts have pointed out that “China sends the largest delegation to the ITU’s various study groups and is also represented by Huawei and other state-owned enterprises that are members. Working through these study groups, with the support of high-level ITU leadership, Huawei has introduced some 2,000 new standard proposals to ITU study groups on topics including 5G, cybersecurity, and artificial intelligence.”

However, the broader evidence to date shows that despite the rapidly rising influence of Chinese firms, the United States continues to maintain its leadership position in international SDOs. The Atlantic Council reports that the United States holds “at least 50 percent of votes in eleven of the thirty-nine standards development organizations.” In the Institute of Electrical and Electronics Engineers (IEEE) Standards Association, for instance, Americans comprise 67 percent of the standards board members, who ultimately approve IEEE standards. The Atlantic Council also found that these SDOs are structurally sound and have been able to withstand pressure from individual governments in the past.

Although the United States continues to exert influence within international SDOs, recent assertive actions by China provide cause for concern. While it is reasonable to expect technology leaders to be active in setting standards, China’s standards strategy does not appear to be designed to enhance the innovation commons, but rather to privilege domestic companies such as Huawei over its global competitors. By politicizing SDOs, China may further damage the bodies’ role in establishing fair and credible standards that serve as reliable platforms for further technological advances and market competition.

Given the scale and ambitions of China Standards 2035, the United States should respond to its potential effects on the development and promulgation of technical standards. Yet the full implications of China’s standards strategy—much less a comprehensive response to it—have yet to be mapped out in full. Simply attempting to limit Chinese participation in global standards-setting organizations may accelerate the rise of China-led and China-only standards, which could set back progress in technological innovation, limit the welfare of consumers, and unfairly disadvantage the competitive position of U.S. firms.

Policy Recommendations

The United States should continue to play an active leadership role in international standards-setting organizations to ensure the effective and fair functioning of the global standardization system. This role should focus on the following pillars:

Promote strong intellectual property rights. Clear and enforceable intellectual property rights incentivize corporations and entrepreneurs to invest in research and development, participate in standardization activities, and contribute their advanced technologies to the process of defining global standards. They are critical for avoiding potential misuse of information obtained during the technical-exchange process, an essential part of standards-development negotiations. The Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments—issued in December 2019 by the U.S. Patent and Trademark Office, the National Institute of Standards and Technology (NIST), and the Department of Justice’s Antitrust Division—clarified the U.S. position on the importance of balancing intellectual property rights with the availability of injunctive relief, which can provide economic opportunities for the owners of SEPs to gain a return on investment from their research and development. This 2019 policy statement should be maintained.

Further, the United States will need to maintain a coherent policy regarding intellectual property rights. For example, President Joe Biden’s Executive Order on Promoting Competition in the American Economy, despite its very good intentions, includes provisions that would increase ambiguity regarding intellectual property protections, reduce the value of intellectual property and SEP rights for U.S. entrepreneurs and innovators, and reduce incentives for U.S. corporations and other inventors to invest and participate in international technology standardization.