Chinese Government Wins By Retreating On Wireless
Standards
In a move which was reported as a compromise by the Chinese
side, Chinese trade negotiator Wu Yu signalled that China
would not press ahead with its own national wireless standard
by its June 30 deadline.
In December, China announced
its own standards for wireless transmission and encryption,
arguing that the international standard, known as Wi-Fi
was not secure enough. In addition, Chinese companies
did not participate in the new standards committee. The
Chinese government, through its powerful Ministry of Information
and Industry (MII) then enforced its own alternative standard,
known as WAPI, which used its own transmission and encryption
standard. This caused an uproar among American technology
companies, most
notably Intel, which lobbied the US government to
push back this new standard.
The American companies argued that this would be a violation
of US intellectual property rights, and enlisted senior
government officials, including US Secretary of State
Powell, to write to the Chinese, urging them to reconsider
their policy. While there had been intellectual property
disputes before, this was the highest level it had ever
been taken to.
It appears that the Chinese were truly taken by surprise
by the strength and level of the American reaction, and
looked for a way to back out. The current visit of Wu
Yi, China's vice premier, and who was formerly in charge
of trade negotiations with the US during the Clinton administration
before China's joining WTO, gave an opportunity. In China,
this visit was widely seen as an opportunity for compromise
with the hardline Bush administration, which is looking
for political wins as it heads into the election season.
The current reasoning in China is that if Bush wins re-election
in November for a second term, the new administration
will pay considerably more attention to China-related
issues, including trade, strategic issues and Taiwan.
By announcing that China would not enforce the June 30
deadline, Intel and other US makers will be free to continue
manufacture of WiFi chips and chipsets, and selling them
to Chinese customers. This time, though, China has won
itself a seat at the table for defining new international
communications standards, because with China's huge market,
Chinese government and companies' input and participation
will be necessary to make a new standard truly international.
And that is the essence of any face-saving compromise.
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