The West first became widely aware of these policies in the middle of the last decade when Chinese authorities announced that wireless chips sold in China would need to implement a “home grown” WiFi standard called WAPI. Significantly, implementing WAPI would require foreign vendors to enter into expensive license agreements a handful of Chinese companies.
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When Texas Instruments and Intel, among others, cried foul and announced their intention to boycott the Chinese market, a major trade dispute resulted. Ultimately, then Secretary of State Colin Powell was tasked with approaching his opposite number in Beijing to defuse the situation. According to one Chinese bureaucrat I spoke to afterwards, disaster was averted in part by U.S. handlers agreeing to a photo op between President Bush and the senior Chinese official responsible for the Chinese standards policy.
At the time, many (including yours truly) were inclined to attribute the standoff to China’s reticence to continue paying patent royalties to western companies to implement global standards, rather than to the security deficiencies alleged to exist by China in the then-current version of the WiFi standard. To be fair, this early version of WiFi did not have as robust a security profile as later versions of the same standard. But was this really what was motivating China’s actions, as compared to the opportunity to level the intellectual property playing field between East and West?
Well, yes and no. In the years that have followed, China’s extremely ambitious and broad efforts to become a force to be reckoned with in global standard setting have been informed by a variety of readily identifiable motivations, rather than a simple economic focus. And one of those motivations has certainly been to continue to ensure that China’s domestic IT infrastructure will allow the government to maintain visibility into the lives of its citizens – as always, of course, in the interests of fostering and protecting a “harmonious and stable society.”
The resulting tension between Chinese and Western standards development priorities was highlighted once again last week in an article posted at the China Daily Web site titled New Standard for Security and subtitled, “Country works to decrease reliance on foreign surveillance equipment.”
As with the WAPI episode, the stated motivation for action at the standards level once again apparently arises from the fact that when Western stakeholders charter development of a standard, they do not tend to give as high a priority to facilitating the type of central government information gathering that Beijing finds desirable. Or, as the China Daily article phrased it:
China's reliance on foreign surveillance equipment, standards and software may threaten the country's security, said government officials. And that in turn may lead to a greater use of a Chinese-developed standard for compressing video surveillance footage.
As a result, China has developed a home grown standard called Surveillance Video and Audio Coding (SVAC), which the Chinese government has reportedly been utilizing since May. The article continues:
"China's security cameras play an important role in countering crimes and maintaining social stability," said Chen Chaowu, deputy director of the Ministry of Public Security's first research institute. "In some important areas and industries, we should avoid the risks to national security that might come from using overseas standards and products."
Instead of SVAC, multinational security system vendors currently implement an International Telecommunications Union (ITU) standard called H.264, which Chinese authorities do not regard as being secure enough for use in “high-security places such as military airports and government buildings.”
Does this have relevance outside of China? Well, yes. You see, in dollar terms, China’s preference for its home-grown standard can have an economic impact equal to what the infamous WAPI mandate might have had unleashed if its implementation had not been indefinitely postponed. In this regard, the China Daily article forecasts that the Chinese surveillance market is forecast to reach 500 billion yuan ($78 billion) by 2015, reflecting a 20 annual growth rate that the newest five year plan will further accelerate. 10% of this total is expected to be generated by purchases of surveillance cameras.
Regardless of western sensibilities, the sheer enormity of the Chinese market is a powerful motivator for global standards implementation. For example, the China Daily article notes that the Japanese-owned company Canon China intends to initiate sales of video surveillance equipment into China with the objective of attaining a 30 percent market share within five years. In other words, it hopes to make billions of dollars selling compliant cameras in China.
To ensure that these products will implement the SVAC, China has organized a consortium to promote its local standard. That organization is supported by “various government departments, including the Ministry of Public Security, the Ministry of Industry and Information Technology, the Ministry of Science and Technology, the National Development and Reform Commission and the Standardization Administration of China.” While implementation of the standard will not be mandatory in surveillance cameras sold in China, the China Daily article states that it will be required in all government procurement for public projects, such as the new Qinghai-Tibet Railway, which will be covered by surveillance cameras for its entire length. And that’s a lot of surveillance cameras.
The upshot? According to China Daily:
Since China takes up so large a part of the world market for surveillance, SVAC may spread to other places quickly if it becomes popular in its country of origin, Jin added. In 2010, the Chinese security industry's output had a value of more than 230 billion yuan, and about 25,000 companies in the industry employed about 1.2 million people, according to statistics from the China Security and Protection Industry Association.
In other words, if a market is large enough, vendors may find it more economical to implement a China-mandated standard across all of its products, regardless of their sales destinations, rather than build both non-compliant as well as compliant versions of the same cameras. Once enabled, these capabilities will be just as available in those jurisdictions as they will be in China.
Thus it is that advanced security capabilities may become available to western purchasers, whether or not majority western sensibilities have placed a sufficiently high priority on those capabilities to embed them in their own standards. Of course, public sensibilities will have no impact on what specific private sector – as well as public sector – purchasers may decide to do with the standards-enabled products that they purchase.
Should you care? Well, the next time you drive through a busy intersection, hop on public transportation, attend a sporting event, drive through a toll booth, or go just about anywhere else, take a look up.
Well son of a gun, will you look at that? I never noticed that camera up there before!