In a rare twist to Washington’s long-standing restrictions on the Chinese tech giant Huawei, the Commerce Department recently reversed its ban preventing U.S. firms from working with Huawei on developing new technical standards.
The move was seen by many in China as an admission by President Donald Trump’s administration that it cannot ignore Huawei’s influential role in developing the technical standards critical for future technologies.
“America finally bowed its head” read a headline by Chinese network Phoenix TV.
The new rule, announced by the Commerce Department on June 15, amends the Huawei “entity listing,” to allow American companies to collaborate with Huawei on setting standards that will determine the technical rules of the road for 5G and other emerging technologies.
“This action is meant to ensure Huawei’s placement on the entity list in May 2019 does not prevent American companies from contributing to important standards-developing activities despite Huawei’s pervasive participation in standards-development organizations,” the department said.
The situation with Huawei is no accident. For years, Beijing has focused on joining international standard-setting bodies, such as 3GPP and the International Telecommunication Union (ITU), which are little-known among the public, but make some of the most consequential decisions in modern telecommunications.
3GPP and the future of your smartphone
Nestled in a quiet industrial park in southern France, a technology consortium with esoteric name, the 3rd Generation Partnership Project, or 3GPP, sets the technical standards behind the world’s communication platforms, the fundamental building blocks for product development. As the primary global standard setting organization for the last 20 years, 3GPP helped create technologies such as WiFi, Bluetooth as well as today’s 5G high-speed networks.
“Standards are not very sexy but extremely important,” Andrew Polk, partner at Beijing-based research and consultancy firm Trivium China, told VOA. “And it takes sustained long-term effort and attention. While western companies try to set standards, China has a long-term coordinated game plan to influence standards,” he said.
China’s leaders have long seen technology as a key to the country’s economic and military might, and have financially backed companies such as Huawei to become powerful global competitors that will help the country’s political and military goals. Critics say Beijing takes the same approach to setting technical standards.
“Beijing views standards as foundational to its goals to reshaping global governance and expand geostrategic power,” said Dr. J. Ray Bowen, analyst of Pointe Bello, a Washington, D.C.-based strategic intelligence firm.
Even though U.S. companies remain world leaders in most areas of technology, observers such as Dustin Daugherty, head of North America Business Development at Dezan Shira & Associates, a pan-Asia business consulting firm, say China’s strategy means “in the future the U.S. could fall behind a coordinated government effort in standard setting (such as from China).”
China’s long-term plan
As of May, Chinese firms and government research institutes have accounted for the largest number of chairs or vice chairs in 3GPP, holding 16 of the 45 available leadership positions, according to VOA’s count based on the data release by 3GPP. By comparison, U.S. companies hold nine such leadership positions.
That’s up from a year ago, when 3GPP sent VOA a file showing that representatives from Chinese and U.S. companies each held 12 chair and vice chair positions.
While the 3GPP is the primary global group setting 5G standards, another major global organization, the International Telecommunication Union (ITU), is now led by a formal Chinese government official Zhao Houlin.
Zhao, who began his career in China’s Ministry of Posts and Telecommunications, was first elected as the secretary-general of ITU in 2014. He was reinstated in November 2018 for another four-year term.
Established in 1865, ITU is one of the oldest international organizations in the world and has historically avoided politics. However, Zhao publicly criticized Washington in its dispute with Huawei, the Chinese communications giant that U.S. officials say has deep links to the military. “I would encourage Huawei to be given equal opportunities to bid for business,” Zhao told reporters in Geneva earlier this year. “But if we don’t have anything then to put them on the blacklist – I think this is not fair.”
Under Zhao’s leadership, another Chinese national, Richard Li, serves as the chairman of a critical group with the ITU called Focus Group Technologies for Network 2030. Li, according to his LinkedIn Page, is still currently employed by Huawei as Chief Scientist and Vice-President of Network Technologies, is in charge of examining the world’s emerging technologies and 5G.
Doug Barry, the spokesperson for The US-China Business Council (USCBC), a private organization with the mission of promoting trade between the two countries, said there are companies that are concerned about the abuse of leadership positions by China, but so far he has not heard any examples of this happening in practice.
“Most international standards setting bodies have strong due process which makes it difficult for stakeholders to abuse leadership positions to force proposals through or block proposals,” said Barry.
Daugherty said because Chinese companies are among the most important international players in a variety of industries, including telecommunications, their presence in industry groups and standard setting bodies is logical. But he said there is an important difference between them and their counterparts from democratic countries.
“Chinese companies (and by extension possibly their individual representatives on such bodies) may ultimately need to answer to Beijing’s priorities for strategically important issues,” said Daugherty.
In an interview with VOA, he said the politicization of such international bodies could conceivably lead to a decrease in legitimacy in international standard setting. “The damage could be immense,” he said.
Flooded with proposals
Holding leadership positions is one part of Beijing’s strategy. Another part involves massive investments in submitting technical proposals to the international groups.
In a rare disclosure last September, Huawei said for one particular technical area alone, the company submitted 18,000 5G New Radio proposals. “If printed on A4 paper and piled up high, would stand a staggering 10 meters tall,” it said proudly on its official twitter account.
The U.S.-China Business Council said last February this is an issue of concern. “Some companies and experts complained that Chinese stakeholders submit large numbers of proposals that are low-quality or irrelevant to market needs in some industries, including for products that China does not actually produce.”
The report titled “China in International Standards Setting” said this takes valuable time and resources away from considering serious proposals.
China also sends more people to attend international meetings that discuss, vote and make decisions on standards.
According to a report release last November by German intellectual property research firm Iplytics, Huawei dispatched over 3,000 engineers to participate in the 5G standard-setting process. American chipmaker Qualcomm sent 1,701 engineers to attend 3GPP meetings.
Dr. Melanie Hart, director for China Policy Center for American Progress, said the Chinese government is channeling state financial support to help Huawei and other Chinese firms send personnel to attend 3GPP meetings and flood the process with Chinese technical contributions.
“It is difficult for private companies from other nations to match that level of activity because sending engineers overseas to participate in 3GPP meetings and devoting R&D resources to develop 3GPP technical contributions are costly activities,” she testified before the U.S.-China Economic and Security Review Commission last March.