No.379 June 26, 2009
Special Issues  
USITO Meeting with Director-General of MoST Hi-Tech Dept
USITO Issue Paper No.631 - Infosec Update
 

On June 24th, USITO met with Mr. Feng Jichun, Director General of the High Technology Dept. of the Ministry of Science and Technology (MoST, 科技部高新司司长). In the meeting, USITO President Dr. John Chiang and a few USITO executive board directors exchanged views with Mr. Feng on a variety of policy issues including hi-tech certification, government procurement catalogue, indigenous innovation products catalogue, the 16 special projects, China's ICT stimulus plan, etc.

Top Story

Xinhua Commentary: 9-Ministry Ciruclar Is Fair and Justified

Last week USITO reported the circular jointly issued by nine Chinese ministries requesting preference for domestic products. It rules that all projects fall under the 4-trillion Chinese government stimulus package shall give preference to domestic products, and any misconduct will be "punished". As this circular has aroused wide doubt and complaints from the international community, this week we began to see counter debate from China's state media. A Xinhua Media Agency report published on June 23 states that the new directive is fair and justified, and it is clearly not a "Buy China" policy and does not creat any discrimination. Key arguments listed in the report include:

1. The circular is in nature a government notice, not a law. It was released by the ministerial level agencies (led by the National Development and Reform Commission, short for NDRC), thus it is "misleading" to call the directive a "Buy China" policy in parallel to the "Buy American" provisions in the USD 787 bln stimulus bill; the latter one shall be regarded as a Law while the Chinese one is just an administrative notice.

2. Since China is not yet a signatory of the WTO Agreement on Government Procurement, any accusations that China may have breached WTO rules would thus be groundless. As the Xinhua commentary says, "giving priority to home-made products is commonly practiced in many countries. "

3. The Circular states that projects under the 4 trillion stimulus package fall under the category of "government procurement"; since government procurement is not about foreign trade, but about how to best spend the taxpayers' money, so guiding policies cannot constitute protectionism.

USITO Notes: A background for the nine ministries to formulate the directive mandating the purchase of domestic products is: In the past few months, the debate grew intense whether Chinese local governments tend to favor foreign products or not in government procurement. Last month EU officials accused Chinese official of discriminating foreign products, but NDRC immediately counter attacked the accusation that the real story is the opposite. We could foresee that dispute will continue for at least some time, thanks to the hardly identifiable definition on discrimination.

We may have to agree with some of the points listed in the Xinhua Commentary, such as China is not yet a member of WTO GP agreement. The directive will help redempt the country's struggling export-reliant sectors, however, at this moment of global economic downturn, protective efforts like these would only increase international trade tensions, and harm other nation's confidence to jointly combat the crisis. This kind of administrative measures will without doubt hinder trade between the nations, and it is also questionable whether they can really foster the competitiveness and innovation of domestic firms.

There is a prevailing misconception on the ground that U.S. is a de facto protectionist country because of its Buy American Act, which restricts the purchase of supplies that are not domestic end products for use within the U.S. Another most frequently quoted example by Chinese officials is, a few years ago, Lenovo computers were excluded from the US government procurement list for "security" reasons. USITO has been taking as many opportunities as we can to clarify and convey the true messages to the Chinese side. We have planned to host an event this September to discuss protectionism-related topics, member please stay alert for our notice.

Shanghai Daily: China to Relax Restrictions on Wi-Fi Handsets

According to a 6/25/2009 Shanghai Daily report, China has relaxed a long-term restriction on Wi-Fi functions on mobile phones, which may solve the biggest obstacle for the Wi-Fi-enabled Apple iPhone's entry into the domestic market. So far, Motorola and Nokia's two models, which also support home-grown WAPI and Wi-Fi, have debuted in China. The Ministry of Industry and Information Technology has told related companies to send models for market-entry tests. The models must support WAPI, and optionally Wi-Fi.

The report say, in the past few years, China had restricted Wi-Fi functions on phones to prevent people using Internet call services such as Skype, which were thought to be against the interests of state-owned mobile carriers. The country is now trying to promote WAPI (WLAN Authentication and Privacy Infrastructure), a home-developed wireless connection technology "with higher security than Wi-Fi". The report comments that the permission for WAPI means the door is now opened to Wi-Fi, which has been widely used in personal computers, game consoles and smartphones, and WAPI and Wi-Fi can be swapped through software and it won't cost much more for handset makers to launch these phones in China. Detail

USITO Notes: Despite the eyeball-attracting headline in the local media, we are yet to see any update on this issue - the mandatory requirement for WAPI in mobile phones remains unchanged, and there is no sign that China will accept type approval tests for mobile phones supporting Wi-Fi only. Actually the authorities are tightening the screws when the mobile industry is migrating to the 3G and LTE era, such as China may want to enforce the adoption of homegrown encryption algorithms. USITO hopes to discuss this issue with our members, interested members please feel free to contact us.

Member in the News: Nokia Siemens, Nortel in USD 650M Deal

Nokia Siemens Networks (NSN) just announced that it will buy the wireless operations of Canadian-based Nortel Networks in a USD 650 million (euro 465 million) deal to strengthen its position in North American markets. NSN said it will purchase the LTE and CDMA assets of Nortel, a former telecom equipment giant now operating under bankruptcy protection.

The transaction is subject to the approval of U.S. and Canadian courts because of Nortel's bankruptcy process, Nokia Siemens said, adding it expected such approvals by July. It described the planned acquisition as "a significant step towards strengthening its leadership" in LTE wireless technology. Detail

Knowledge Center: Study of IT Application Market Opportunity in Government Investment Related Industry MEMBER DOWNLOAD The report briefs the status quo of government stimulus plans for the ten industrial sectors, as well as their prospects.

Selected Chinese Media Reports
 

Regulations

Test Authorities Widely Accept WAPI Terminal Tests, Including GSM, CDMA, MP3

Sources said that the labs under MIIT have accepted large amount of testing requests for WAPI terminals, including 3G handsets, GSM and CDMA handsets, as well as other mobile terminals such as MP3 and MP4. With a view to supporting the development of China 's proprietary WAPI and ensuring the quality of WAPI mobile user terminals, the Technical Specifications and Testing Methods of Wireless LAN for Mobile Terminals (YDC079-2009) were just drafted under the guidance of MIIT, providing detailed criteria for testing of WAPI mobile terminals. Currently, WiFi-compliant WLAN equipment are widely used in China , but China has long refused to issue a license for its commercial application. WAPI is China 's proprietary WLAN standard, and according the authorities is much safer and more reliable than WiFi. Chinese Text

Internet Healthcare Information Rules To Be Effective

Administrative Measures for Internet Healthcare Information Services were approved by the Ministry of Health on March 25, 2009, and will be implemented on July 1. The purpose of the Measures is to regulate the healthcare information service activities on Internet, ensure scientific and exact healthcare information, and promote the healthy and orderly development of Internet-based healthcare information services. The rules are applicable to all the Internet-based healthcare information service activities within the territory of China . The Internet healthcare information service mentioned herein refers to any service activity of providing healthcare information to Internet users through operating healthcare agency websites, prevention & healthcare knowledge websites or setting up preventive healthcare channels on all-round websites. Chinese Text

MOC to Regulate E-game Market

Ding Wei, Assistant to the Minister of Culture, said on June 23 that the Ministry of Culture plans to further regulate the order the e-game exhibition and trade markets in China . Ding Made the remarks when meeting with Mr. David Levin, CEO of UBM. Both sides exchanged views on such issues as international games development and cooperation, and Game Developer Conference, and signed many cooperation intention documents. Ding said China is endeavoring to build a fair market competition environment. Chinese Text

3G Mobile Communications

TD Alliance Recruits Six New Members

Sources said that 6 enterprises including Gionee and Borqs have become new members of the TD Industry Alliance, bringing the total number of alliance members to 66. The six enterprises include mobile phone vendors, chip makers and software makers, and their accession is expected to increase the strength of the Alliance . The TD Alliance was founded on October 30, 2002 to accelerate the TD industrialization process and form a complete industry chain. According to the TD Alliance, this expansion not only enhances TD service applications and software R&D capabilities, but also adds fresh blood in TD terminals and chips R&D. Chinese Text

China Telecom Introduces First Batch of 3G Mobile Phones to Market

China Telecom announced that it has launched a 3G handset publicity campaign, and 20 handset types have been introduced to the market in the first batch. It is said that 3G handsets have been widely distributed to China Telecom's local outlets and large numbers of dealers. China Telecom adopted a flexible approach on procurement of handset types, allowing provincial branches and various levels of agents to procure large numbers of handset type, except some to be procured by the headquarters. Currently, China Telecom's CDMA handset industry chain includes over 70 vendors and over 40 design companies. Chinese Text

Huawei Wins Big Contract in China

Huawei announced that it has won the contract of Beijing-Kowloon Railway GSM-R project, which is a GSM-R railway communication project with the longest mileage in China . At the same time, Huawei was also awarded the contract on Taiyuan-Zhongwei-Yichuan Railway GSM-R project. The two contracts marked the Ministry of Railways' recognition of Huawei's GSM-R railway communication solutions for their high performance, high reliability and high maturity. According to He Gang, President of GSM & WCDMA Product Lines, “Huawei will keep watching the needs of railway customers, give full play to its unique advantages, support the construction of major railway projects in China, and deliver safe, reliable and mature end-to-end railway communication solutions. “ Chinese Text

 

Trade & Investment

China Makes Much Headway in High-tech Business Incubation

On June 22, the Technological Achievements Application Promotion Week opened in Shanghai . Xiu Xiaoping, Vice Director of the Torch Center of the Ministry of Science and Technology, said at the conference forum that China has built a total of 674 high tech business incubators of various levels, ranking the world number one in area, number of high tech business being incubated, and success rate of incubation. “Small and medium-sized high tech enterprises (SMEs) are the main force of achieving indigenous innovation,” Xiu said, “in China, SMEs have contributed about 2/ 3 of China's total patents for invention, contributing much to China's GDP, exports and employment.“ Chinese Text

MOFCOM Plans to Adopt Incentives Stimulating Home Appliances Consumption

According to the spokesman of the Ministry of Commerce, MOFCOM is planning to enact policies and measures encouraging consumption of household appliances. In addition to continued implementation of two policies: “Household Appliances for Farmers” and “Automobiles for Farmers”, MOC will announce a new policy: household appliances and automobiles trade-in policy, and grant subsidies to encourage farmers to trade in old home appliances and automobiles for new ones. The spokesman also said that power prices for non-production enterprises will be further cut, to achieve same prices for commercial power and industrial power. Chinese Text

China Intellectual Property Index Published

China Intellectual Property Index Report was published in Beijing , as China 's first such report prepared by China Intellectual Property Index working group. According to the report, Guangdong ranks number one in terms of its overall capabilities in patent ownerships etc., followed by Shanghai and Beijing . The number of annual patent applications in the coastal provinces is far more than that in other parts of China . In Guangdong , over 100,000 patent applications are lodged every year, and 60,000 are approved. Chinese Text

UTStarcom Becomes Top Broadband Equipment Supplier in India

UTStarcom announced on June 21st that it has become the largest broadband equipment supplier in India's market. According to the industry analysis report published by Voice & Data based on a thorough market survey and analysis, UTStarcom's market share is expected to reach 29.5%, bringing an operating revenue growth of 38%. Voice & Data Top 100 is one of the awards UTStarcom has received recently in India . UTStarcom's broadband solutions enable deployment of high-speed IP network and offering of audio, video and multimedia service on cabled and optical networks. Chinese Text

Software

China's Software & Information Service Outsourcing Industry Grows Sharply in 2008

The 2009 Report on Development of China's Software and Information Service Outsourcing Industry recently published by the Department of Software Service Industry of MIIT showed that in 2008, China 's software and information service outsourcing industry reached a market size of RMB 156.77b, a growth of 41.2% year on year. This is the first official document summarizing the software and information service outsourcing industry in China , published since the establishment of the Department of Software Service Industry. The report reveals the positive role of policies and measures adopted by the central and local governments in promoting the development of the service outsourcing industry, analyzes the future trends of international and domestic service outsourcing industries, and difficulties & challenges facing the industries, and on this basis, forecasts the industry's prospects. Chinese Text

China's Software Sales Set to Top RMB 1 Trillion in 2010

Zhao Xiaofan, Director-general of the Department of Software Service Industry of MIIT said a series of preferential policies will be published in fields of basic software and key application software. According to Zhao, the target set by the Department for the software sales for the 11th 5-Year period is RMB 1 trillion in 2010, and the target will be accomplished at the end of 2010. In case the target is fulfilled, the software industry will account for 2% of China ‘s GDP. According to Chen Ying, Chairman of China Software Industry Association, RMB 3-4 billion will be allocated soon for the implementation of the first batch of projects concerning core electronic devices, high-end general chips and basic software products; relevant policies will be subsequently announced. Chinese Text .

 

USITO selected and translated the news summaries above. If you are interested in learning more details about the above Chinese language links, you are welcome to contact us (wenjie@usito.org) to sponsor the translation of that report.

DISCLAIMER: The USITO IT Weekly is a free internal publication for the members of the United States Information Technologies Office (USITO) and certain friends of USITO. Subscription is by invitation only. IT Weekly is a publication of USITO which is solely responsible for its content. This publication may be distributed only by explicit permission from USITO. Please reply this email to unsubscribe from the circulation list. If you have any questions on the contents, please send a message to the chief editor of this publication via wenjie@usito.org.