Toward Greater Pragmatism? China's Approach to Innovation and Standardization

Why China’s approach mattersOnly a few years ago, China’s approach to innovation and standardization barely played a role in international economic diplomacy. With its economic power on the rise, that assessment has changed dramatically. Today, China’s innovation policy and its perceived threat to American innovation and competitiveness are a hot topic in U.S.-China economic relations, adding further to contentious disputes about exchange rates, trade, and foreign direct investment. The role of standardization, together with intellectual property rights and government procurement, are at the center of this conflict.As the United States and China display fundamental differences in their levels of development and in their economic institutions, they pursue quite different approaches to standards and innovation policy. The American consensus is that market forces and the private sector should play a primary role in innovation and standardization. China, on the other hand, relies much more on the government to define the strategic objectives and key parameters.In the United States, there is a widespread expectation that further reforms of China’s standards system will “naturally” converge to (almost) full compliance with a U.S.-style, market-led, voluntary standards system. That expectation can be found, for instance, in the “United States Standards Strategy,” approved by the Board of Directors of the American National Standards Institute (ANSI) on December 8, 2005, which proposes a “universal application of the globally accepted principles for development of global standards” which is based on the U.S. voluntary standards system.Limited ConvergenceYet, as documented in a new study , China’s evolving standards system provides little evidence that convergence to the American system is likely to materialize. When Chinese reformers argue for a transition to a more market-driven standards system, they emphasize that the government will continue to play an important role as a promoter, enabler, and coordinator of an integrated standards and innovation policy.