THE third plenary session of the 20th Central Committee of the Communist Party of China set clear goals for accelerating the construction of a unified national market.

The communique issued by the third plenary session emphasises the need to improve the national standardisation system, deepen local standards’ management reform, promote fair competition, boost efforts to curb monopoly and unfair competition, and abandon regulations and practices that hinder the development of a unified national market.

By unifying technical standards, service norms and quality requirements, the authorities can reduce market players’ information and transaction costs, promote the free flow of goods and factors, and improve market efficiency.

Standardisation of the circulation sector is especially important for ensuring the smooth flow of the national economy.

Standardisation reforms in logistics intensified

In recent years, China has made significant progress in standardisation reforms in sectors such as logistics. For example, logistics costs as a share of the business revenue have reduced on average by 31.6% in pilot cities while employment has increased by 10.5%.

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

Different ministries, industrial associations and local governments often operate independently, leading to use of multiple, contradictory standards in various fields.

This undermines the authority and effective implementation of standards.

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

Emerging sectors suffer due to outdated standards.

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

Local standards, in many cases, have become market barriers. Some local governments set market 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 unified national market.

Official data showed that 15% of provinces still have independent local standardisation systems.

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

For instance, some provinces require public procurement to meet “local standards”, barring out-of-province enterprises from bidding.

As for large enterprises, they often set standards higher than the national level, thus erecting technological barriers and building market monopolies, which harm small and medium enterprises (SMEs) and consumers.

Even some mandatory standards are not fully or properly implemented due to the lack of a dedicated legal framework, while the penalty or punishment for violations are too lenient to prevent the violation of standards.

Also, SMEs often lack the initiative or fail to voluntarily comply with the set standards even if they pass certification.

No effective supervision

Also, supervision on the implementation of standards is weak, while cross-regional enforcement remains a challenge and coordination between administrative and judicial enforcement is poor.

And there is a shortage of talents that specialise in standardisation, with most enterprises not having dedicated departments or posts for standardisation management, perhaps because the talent training system is underdeveloped and only a few universities offer standardisation-related majors.

Therefore, the standardisation mechanisms should be urgently improved, because the existing policies for professional title evaluation and salary distribution are not conducive to cultivating talents that specialise in standardisation.

To address the above issues, the authorities need to deepen reforms, remove institutional barriers, and create a unified, open and orderly standardisation ecosystem, and consolidate the existing standards, for which reviews, revisions and upgrading of standards are needed along with measures to improve coordination among national, industrial, local and group standards.

In addition, priority should be accorded to core standards in fields such as new generation information and communications technology, high-end equipment, new materials and biomedicine, so as to facilitate the rapid and healthy development of industries.

The authorities should also promote the systemic integration and coordination of standards; link upstream and downstream standards, and align them with international standards; while encouraging social organisations and enterprises to develop advanced standards.

Among the other important tasks are upgrading or abolishing the local standards that hinder the development of a unified national market, and the elimination of local standards that create market barriers and violate the principles of fair competition.It is also important to minutely review and, if need be, revise the standards related to market access and product certification, so as to prevent the abuse of administrative powers, as well as to regulate and guide the independent standard-setting activities of enterprises, and ensure lower-level standards conform to the national standards.

 - China Daily