Telecommunications: Primacy of Power and Regulatory Battles for Promoting National Standards - Part 6

Second, national standards that are not harmonized with international standards will be treated as discriminatory standards (nontariff barriers) and have to be eliminated. Upon its WTO accession, China had to take actions on two divergent policy directions — harmonizing most of its national standards with international standards and at the same time, it hoped to internationalize a few cutting-edge home-grown standards. The Chinese government plans to compile 10,000 new standards to meet the standard vacuum in certain fields next year. Meanwhile, some 11,000 outdated national standards will be revised, according to the Standardization Administration chief Liu Pingjun. (Zhou, 2007)

Fourth, China, over the years, believes that it has been a victim of the “patents trap.” China's participation in the global economy is largely constrained by the international production networks established by others. These networks employ technical standards and technological architectures set by the American, European, and Japanese multinational corporations (MNCs), which are able to capture value from their control over standards and intellectual properties. Thus, while China's absolute gains have been significant, it remains more than a little dissatisfied with the relative gains it has realized in comparison to international technology leaders (Suttmeier & Yao, 2004, p. 4). Since the early 1990s China has often seen itself as being in a “patent trap” that forces it to pay substantial royalties to others out of the sales of its manufactures. One example is the patent dispute with Phillips, Sony, and Pioneer in 2002, when Chinese-made DVD players (90% of the world's DVD players are now made in China) were impounded at European ports because the manufacturers allegedly had not paid for part of the patents used. In the following negotiations the patent holders demanded US $20 per machine on equipment with a unit sales price of only US $90 and the profit margin of the whole industry chain was less than 5% of their sales price. Although this “standard war” was later settled, it reinforced China's perception that without independent intellectual property rights Chinese industry is too vulnerable to global competition.

Fifth, while China has gained considerably from the global economy due to its position as the “world's factory,” it strongly feels that it has also paid a painful price over the past three decades, primarily in terms of resource exhaustion and environmental degradation.

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