Improving standardization to build a single market

THE THIRD plenary session of the 20th Central Committee of the Communist Party of China clearly stated the goals of accelerating the construction of a unified national market.

The Communiqué issued by the third plenary session emphasises the need to improve the national standardisation system, deepen the reform of the management of local standards, promote fair competition, step up efforts to curb monopolies and unfair competition, and abandon regulations and practices that hinder the development of a single national market.

By harmonizing technical standards, service standards and quality requirements, authorities can reduce information and transaction costs for market participants, promote the free flow of goods and factors and improve market efficiency.

Standardization of the circulation sector is particularly important to ensure the smooth flow of the national economy.

Standardization reforms in logistics have been intensified

In recent years, China has made significant progress in reforming standards in sectors such as logistics. For example, logistics costs as a share of company revenue fell by an average of 31.6% in pilot cities, while employment rose by 10.5%.

However, building a single national market still faces challenges. For example, the current standardisation mechanism is confusing and problematic due to overlapping and conflicting standards.

Different ministries, industry associations and local governments often operate independently, leading to the application of many conflicting standards in different areas.

This undermines the authority and effectiveness of implementing standards.

For example, China has more than 6,000 construction engineering standards, but only about one third of them are enforced.

Emerging sectors suffer from outdated standards.

Strategic, emerging industries and modern services urgently need guidance and regulation to develop, but the lack of developing and updating standards – the adoption rate of international standards in high-tech industries is less than 30%, hampering innovation and growth – reduces the overall effectiveness of the standardisation system.

Local standards have in many cases become market barriers. Some local authorities set entry thresholds under the guise of local standards, blocking the entry of products and services from other areas and thus undermining efforts to develop a single national market.

Official figures show that 15% of provinces still have independent local standardization systems.

Standards also serve to build and maintain administrative monopolies. Government departments and state-owned enterprises use their power to set standards that serve their own interests and exclude competitors, hindering the free flow of factors.

For example, some provinces require that public procurement meet “local standards,” preventing out-of-province companies from bidding.

Large companies often set standards higher than those applicable at national level, which creates technological barriers and market monopolies, which harms small and medium-sized enterprises (SMEs) and consumers.

Even some mandatory standards are not fully or correctly implemented due to the lack of a specific legal framework, and penalties for violations are too lenient to prevent violations of the standards.

Moreover, SMEs often lack initiative or do not meet voluntarily set standards, even if they pass certification.

Lack of effective supervision

Furthermore, supervision of the implementation of standards is weak, cross-regional enforcement remains a challenge and coordination between administrative and judicial bodies is weak.

There is also a shortage of specialists dealing with standardization, and most companies do not have separate departments or positions to manage standardization. This is probably because the staff training system is poorly developed, and only a few universities offer courses related to standardization.

Therefore, there is an urgent need to improve standardisation mechanisms, as the current policies regarding the valuation of professional titles and the distribution of salaries are not conducive to educating talents specialising in standardisation.

To address these issues, the authorities need to deepen reforms, remove institutional barriers, and create a unified, open and orderly standardization ecosystem and consolidate existing standards. This requires reviews, revisions and updates of standards, as well as measures to improve coordination between national, industry, local and group standards.

In addition, priority should be given to basic standards in areas such as next-generation information and communication technologies, high-end equipment, new materials and biomedicine to facilitate rapid and orderly industrial development.

Authorities should also promote systemic integration and coordination of standards, link upstream and downstream standards and align them with international standards, while encouraging social organizations and enterprises to develop advanced standards.

Other important tasks include upgrading or abolishing local standards that hinder the development of a unified national market, and eliminating local standards that create market barriers and violate fair competition. It is also important to carefully review and, if necessary, revise standards related to market access and product certification to prevent abuse of administrative powers, and to regulate and guide enterprises’ independent standard-setting activities and ensure that downstream standards are consistent with national standards. — China Daily/ANN

Huang Wei is an associate professor at the National School of Development, Peking University. The views expressed here are the author’s own.