Page 496 - 2021 White Paper
P. 496
1 White Paper on the Business Environment in China
by state-guided investment funds – some and ensure they work no matter where you are
Chinese semiconductor companies are looking in the world. Standards are behind many of
to develop core technologies that allows China the technologies we use every day, such as our
to bridge that gap. In recent years, many new smartphones. Major American and European
12-inch semiconductor fab projects have been technology companies, such as Qualcomm and
announced in China, including projects in Xiamen, Ericsson, have been part of standards setting
Hefei, Nanjing, Wuhan, and Chengdu. With the across various industries. But China has played
booming growth of China’s digital economy, an increasingly active role in the past few years.
cybersecurity has become critically important China may have big ambitions, but dislodging the
to Chinese regulators. China’s Cybersecurity dominance of the U.S. and Europe won’t be an
Law took effect on June 1, 2017 and is designed easy task. While increased Chinese participation
to promote national security. Implementing and government involvement has created some
measures for the law – including those on procedural challenges, it has not created undue
cybersecurity review and cross-border data influence or tipped the competitive scales in favor of
flow – will have a large, but as of now unknown, the Chinese. The US and multinational companies
effect on foreign firms and the development of are still largely regarded as the most influential
the ICT industry as a whole. China continues participants in ICT-related standards bodies —
to introduce new laws and measures related to based on their technical leadership and expertise,
the Cybersecurity Law for public comment in deep understanding of standards processes and
advance of future implementation. Foreign firms rules, quality of contributions, and consistent
must comply with China’s Multi-Level Protection participation over time. The ITI represents over 70
Scheme, (MLPS), which seeks to protect global information and communications technology
information networks from being damaged or companies. China will also need to boost the quality
attacked. Products are classified from one to of the companies contributing to global standards.
five, one being the lowest and five being the most The country will need to develop companies that
critical to China’s national security, social order, are able to do what Huawei is doing, but in a variety
and economic interests. Technology products of different technology sectors. These standards
at MLPS levels three and above must include at are set by industry bodies through companies that
least some domestic IP. MLPS also requires that participate in them. Usually the companies want
traditional IT products at level three or above the best, the highest standards, and the best tech
be subject to rigorous testing. Few foreign usually wins out. That is why the U.S. and Europe
companies are licensed to sell products at level have the incumbent advantage. They have highly
three (PSN). advanced companies (Kharpal, Power).
China Standards 2035 With China’s intended transformation from
the world’s extended workbench to an export-
Technologies and industries around the world oriented technology provider, standardization
have standards that define how they work and their has increasingly been used as a strategic
interoperability around the world. Interoperability instrument by the Chinese side for about 10
refers to the ability for two or more systems to years. In this context, standardization particularly
work together. The telecommunications industry addresses those areas that are defined as
is a good example. New networks such as 5G priority technologies in the respective five-year
aren’t just turned on. They take years of planning plan. Accordingly, in the mechanical engineering
and development. Technical standards are sector, specific Chinese standardization
created through collaboration between industry activities in relation to intelligent manufacturing
bodies, experts and companies. Those technical processes in the machine tool sector could be
specifications are adopted and integrated into observed based on the 12th Five-Year Plan which
what becomes known as standards. That ensures expired in 2020. In China, it was recognized
that standards are as uniform as possible, which years ago that Chinese participation at the level
can improve the efficiency of network rollouts of the international standards organizations ISO
and IEC does not correspond to the country’s
496
by state-guided investment funds – some and ensure they work no matter where you are
Chinese semiconductor companies are looking in the world. Standards are behind many of
to develop core technologies that allows China the technologies we use every day, such as our
to bridge that gap. In recent years, many new smartphones. Major American and European
12-inch semiconductor fab projects have been technology companies, such as Qualcomm and
announced in China, including projects in Xiamen, Ericsson, have been part of standards setting
Hefei, Nanjing, Wuhan, and Chengdu. With the across various industries. But China has played
booming growth of China’s digital economy, an increasingly active role in the past few years.
cybersecurity has become critically important China may have big ambitions, but dislodging the
to Chinese regulators. China’s Cybersecurity dominance of the U.S. and Europe won’t be an
Law took effect on June 1, 2017 and is designed easy task. While increased Chinese participation
to promote national security. Implementing and government involvement has created some
measures for the law – including those on procedural challenges, it has not created undue
cybersecurity review and cross-border data influence or tipped the competitive scales in favor of
flow – will have a large, but as of now unknown, the Chinese. The US and multinational companies
effect on foreign firms and the development of are still largely regarded as the most influential
the ICT industry as a whole. China continues participants in ICT-related standards bodies —
to introduce new laws and measures related to based on their technical leadership and expertise,
the Cybersecurity Law for public comment in deep understanding of standards processes and
advance of future implementation. Foreign firms rules, quality of contributions, and consistent
must comply with China’s Multi-Level Protection participation over time. The ITI represents over 70
Scheme, (MLPS), which seeks to protect global information and communications technology
information networks from being damaged or companies. China will also need to boost the quality
attacked. Products are classified from one to of the companies contributing to global standards.
five, one being the lowest and five being the most The country will need to develop companies that
critical to China’s national security, social order, are able to do what Huawei is doing, but in a variety
and economic interests. Technology products of different technology sectors. These standards
at MLPS levels three and above must include at are set by industry bodies through companies that
least some domestic IP. MLPS also requires that participate in them. Usually the companies want
traditional IT products at level three or above the best, the highest standards, and the best tech
be subject to rigorous testing. Few foreign usually wins out. That is why the U.S. and Europe
companies are licensed to sell products at level have the incumbent advantage. They have highly
three (PSN). advanced companies (Kharpal, Power).
China Standards 2035 With China’s intended transformation from
the world’s extended workbench to an export-
Technologies and industries around the world oriented technology provider, standardization
have standards that define how they work and their has increasingly been used as a strategic
interoperability around the world. Interoperability instrument by the Chinese side for about 10
refers to the ability for two or more systems to years. In this context, standardization particularly
work together. The telecommunications industry addresses those areas that are defined as
is a good example. New networks such as 5G priority technologies in the respective five-year
aren’t just turned on. They take years of planning plan. Accordingly, in the mechanical engineering
and development. Technical standards are sector, specific Chinese standardization
created through collaboration between industry activities in relation to intelligent manufacturing
bodies, experts and companies. Those technical processes in the machine tool sector could be
specifications are adopted and integrated into observed based on the 12th Five-Year Plan which
what becomes known as standards. That ensures expired in 2020. In China, it was recognized
that standards are as uniform as possible, which years ago that Chinese participation at the level
can improve the efficiency of network rollouts of the international standards organizations ISO
and IEC does not correspond to the country’s
496
