Los Angeles Times

A shadow war over technology

China is working the system to try to make its technologi­es the global standard. The West needs to push back.

- By Anja Manuel and Melanie Hart

Anew shadow war is underway within the Internatio­nal Telecommun­ication Union and a consortium of telecom standards organizati­ons that set global technical standards. Internatio­nal standard-setting is a morass of positive intentions and poor execution. When the process works, it selects the best technologi­es based on merit and, for example, allows people to use their personal cellphone numbers anywhere on Earth. When the system fails, we end up with different electrical outlets in each country and a scramble for adapters.

Beijing sees standard-setting as an opportunit­y to promote Chinese technologi­es and make them the global standard. It is focusing particular attention on the ITU and other bodies that are setting global fifth-generation, or 5G, mobile telecom specificat­ions.

The U.S. takes a hands-off approach, depending on leading American corporatio­ns to put forward great technical contributi­ons in these bodies and assume they will be judged based on their merits. Beijing, in contrast, intervenes to boost China’s national champions, particular­ly Huawei. The result: China is grabbing a growing share of critical patents in the emerging global 5G standard.

To solve this problem, Western government­s must take action, but they don’t need a heavy hand — small fixes can ensure the standards-setting system remains fair and transparen­t.

With the world distracted by COVID-19, Beijing is pushing forward. China recently published a 2020 work plan that, among other things, detailed its intentions to promote Chinese global rules for emerging technologi­es.

The Chinese campaign normally occurs behind closed doors, but a 2018 dustup over Lenovo’s voting record at the ITU illustrate­s how Beijing promotes China’s national champions, particular­ly Huawei. In early voting, representa­tives of Lenovo — the Chinese computer company that acquired IBM’s personal computer business in 2005 — voted for the American-proposed standard developed by U.S. company Qualcomm over that put forward by Huawei. When Chinese web users found out, they whipped up a firestorm of nationalis­t sentiment.

To defend the company’s reputation as a good Chinese citizen, Lenovo’s founder and CEO issued an extraordin­ary public statement to explain that Lenovo had voted for Qualcomm in one round because its approach best aligned with Lenovo’s own “early-stage technology and patent reserves,” but that it voted for Huawei in a separate round because “Chinese companies should unite.” Although Lenovo is publicly traded, when it comes to 5G standards, the company is more accountabl­e to Huawei, Beijing’s national champion, and to Chinese nationalis­t sentiment than to its own shareholde­rs.

These technical efforts have huge policy implicatio­ns. Those who set the standards receive more royalties, better prices and greater market share. An unfair process can result in standards that are not the best technicall­y, making all of us less secure. And in the worst case, especially when it comes to 5G wireless technology, the world could find itself with two different, incompatib­le standards: one used in the U.S. and perhaps some parts of Europe, and another in the rest of the world.

Beijing exerts tremendous influence in these standards-setting bodies by violating long-held norms without explicitly violating internatio­nal law.

China pushes for chairmansh­ips of key standard-setting organizati­ons, giving Beijing the ability to set the agenda. It is no accident that former Chinese telecom official Zhao Houlin leads the ITU. China recently lobbied hard to lead the World Intellectu­al Property Organizati­on as well. In this rare case, Western government­s were paying attention and successful­ly defeated Beijing’s candidate through intense lobbying.

The Chinese government coordinate­s the efforts of its companies and provides significan­t aid, resulting in a cohesive push for dominance. For Western firms, creating and putting forward technical contributi­ons is expensive, so they propose just a few. With Chinese government research and developmen­t aid, Chinese companies can flood the zone.

When contributi­ons are put forward, Western companies respond individual­ly. In contrast, Chinese officials meet with all Chinese companies before key meetings to inform them of national objectives. The Chinese delegation almost always unites as a single block. The end result: China is close to muscling a takeover of the global telecom space, with twice as many “standards essential” patents as U.S. companies.

Of course, quantity of patents isn’t everything. Huawei does not yet clearly lead the technical race on 5G (or 6G and other future technologi­es), but partly through standards-setting it is creating a built-in price advantage.

The U.S. and its allies must pay better attention and push back where necessary. They should map out which of many technology standards are critical to national security in addition to 5G, including hardware standards related to artificial intelligen­ce and the structure of the internet itself.

For these few technologi­es that are key to our security, Western government­s must ensure that knowledgea­ble experts attend important standards-setting meetings. Washington certainly should not emulate Beijing and tell American companies how to vote. But on a call before the meetings, government officials can let companies know what Beijing is up to and allow private coalitions to form. Washington could also provide research funds to allow more U.S. firms, especially start-ups, to participat­e. These are simple, inexpensiv­e fixes to avoid a potentiall­y dangerous path.

To prevent Beijing from dominating the standard-setting process, there is no need to adopt China’s severe, top-down methods — only for Western government­s and companies to engage and ensure the system remains fair and transparen­t.

Anja Manuel is a former U.S. State Department official and the author of “This Brave New World: China, India and the United States.” Melanie Hart is a senior fellow and the director for China policy at the Center for American Progress.

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