Legislation Review: China to Revamp Standardization System

Closely examine the packaging of any Chinese consumer product and you will most certainly find in the fine print the letters “GB”—the symbol for compulsory national standards. Sitting at the top of China’s standards hierarchy, the “GB” standards are formulated by the State Council and compliance with them is mandatory. Local governments and private entities may also adopt standards, and in many cases compliance is merely voluntary. Together, these standards prescribe uniform technical requirements for diverse fields ranging from purified water bottling to pharmaceutical manufacturing.

Yet, as the Chinese Government itself has recognized, the current standardization system—established in the late 1980s with the enactment of the Standardization Law (1989 Law)—no longer meets actual needs and has even slowed development. In an effort to modernize the system, earlier this year the State Council submitted to the NPC Standing Committee (NPCSC) a draft revision to the Law (Draft), which the NPCSC reviewed last month. The Draft essentially aims at restructuring the existing standardization system, and below we provide a summary of its core content.

Scope of Standardization

1989 Law: Article 2 limits the fields that are subject to standardization to industrial products, environmental protection, and construction projects.

Problems: The State Council states in a policy document titled the Plan for Deepening Reform of Standardization Efforts (Reform Plan) that there is—

  • A dearth of standards for modern agricultural and service industry;
  • A certain degree of standards shortage even in the field of industry;
  • A “large gap” in the supply of standards for burgeoning fields such as e-commerce.

Draft: The revised Article 2 expands the fields covered to include “agriculture, industry, service industry, and social undertakings [社会事业].”

Government-developed Standards

1989 Law: According to their promulgating entities (noted below in parentheses), government-developed standards currently fall into the following categories (Art. 6):

  • National standards (Standardization Administration of China, or SAC);
  • Industry standards (State Council departments);
  • Local standards (provincial governments).

Under the 1989 Law, national standards take precedence over industry and local standards, and industry standards over local standards (Art. 6). Further, industry standards must be filed with the SAC, and local standards with the SAC as well as with relevant State Council departments (Art. 6).

The standards in each category above can be classified as either compulsory standards or voluntary standards (Art. 7). Compliance with compulsory standards is mandatory and acts as a prerequisite for “manufacturing, selling, and importing” relevant products (Art. 14). Among standards formulated by State Council bodies (i.e., national and industry standards), compulsory standards only comprise those that “protect human health, personal and property safety” or are legally required to be as such (Art. 7). On the local level, only those that concern the “safety of and hygienic requirements for industrial products” are compulsory (Art. 7).

Problems: Because the 1989 Law fails to provide for effective mechanisms to enforce the standards hierarchy, nearly 2,000 national, industry, and local standards have identical names, and some even include “conflicting” technical requirements, troubling companies and law enforcement alike. The problem is especially serious with the nearly 10,000 existing compulsory standards—due to a lack of coordination among the numerous governmental entities with standard-issuing authorities.

Draft: The number of categories of standards is reduced to the following four (Art. 9–12):

  1. National standards—compulsory (Art. 9)
    • Promulgated in the name of the State Council;
    • The SAC is uniformly responsible for project initiation and numbering (e.g., GB17323 for bottled purified water);
    • Relevant State Council departments are responsible for drafting and soliciting public opinions;
    • Only for technical requirements that “safeguard human health, personal and property safety, national security, ecological and environmental safety, and meet the basic need of social and economic management”;
    • Will be made available for free (Art. 17).
  2. National standards—voluntary (Art. 10)
    • Formulated by the SAC;
    • For technical requirements that “meet basic and general demand, complement compulsory national standards, and may guide relevant industries.”
  3. Industry standards—voluntary ONLY (Art. 11)
    • Formulated by State Council departments;
    • Must be filed with the SAC.
  4. Local standards—voluntary ONLY (Art. 12)
    • To meet special technical demands such as “local natural conditions or customs.”
    • Formulated by provincial governments, and also by municipal governments if approved by provincial governments;
    • Must be filed with the SAC and relevant State Council departments.

In other words, under the Draft, only national standards could be compulsory, and the subjects of such standards will be “strictly restricted” to the ones cited above. The Draft further stipulates that the technical requirements in voluntary national standards, industry standards, and local standards must not be below the relevant requirements in compulsory national standards (Art. 19).

To help enforce the new hierarchy described above, the Draft grants the SAC the authority to order other governmental entities to revise the unlawful standards they adopt, and in the event of noncompliance, to annul those standards (Art. 35).

Private Standards

1989 Law: It only provides for one type of private standards: those that are adopted by individual businesses, or enterprise standards (Art. 6). An enterprise standard must be filed with the standardization administration and other relevant departments of the local government before it can be implemented within the enterprise.

Problems: On the one hand, the Reform Plan recognizes, governmental entities have so far taken the place of private market players in drafting most standards, leading to a shortage of standards that reflect market demand. On the other hand, even for in-house standards, companies still have to undergo burdensome review-like filing processes, which stem “innovation and competitiveness.”

Draft: First, it eliminates the filing requirement for enterprise standards. Instead, companies will need to declare the standards—including enterprise standards—they implement on an online platform. For their own enterprise standards, companies must also disclose the “functional indicators of their products or services, the performance indicators of their products, as well as the corresponding testing methods” (Art. 22). Failure to disclose such information will result in corrections ordered by standardization administrations alongside public announcements of their violations (Art. 34).

Second, the Draft gives legal status to group standards adopted by “lawfully established social groups” (Art. 13), including “academies, associations, chambers of commerce, and federations.” Groups standards do not require governmental approval either, but their formulation is subject to the “regulation, guidance, and supervision” of the SAC and relevant State Council departments (Art. 13).

Lastly, both enterprise standards and group standards must not prescribe less stringent technical requirements than relevant compulsory (national) standards (Art. 19). And the SAC is authorized to annul standards that do not meet this requirement (Art. 35).

Responsiveness of Standards

1989 Law: The current Law contains just a single provision on keeping the standards up to date: Article 13 requires governmental entities that formulate standards to “reexamine” (复审) them “at appropriate times” “based on the demand of scientific and technological development and economic construction” to determine whether they should remain in force or should be revised or repealed.

Problems: The Law does not contain any provisions on ensuring that such reexaminations are indeed being conducted. Consequently, China’s standards are being updated slowly and on average “more than twice as old” as those of major developed countries, according to the Reform Plan. In addition, due to the absence of an authoritative coordinating body, different State Council departments tend to wrangle over important yet complex standards, thereby delaying their adoption.

Draft: Reexamination. Article 25 requires governmental entities to evaluate and reexamine the standards they formulate “at regular intervals,” limiting the discretion they currently enjoy. They should then use the result of reexaminations as the basis for revising or repealing standards. The SAC is empowered to order other governmental entities to make corrections if they fail to conduct regular reexaminations (Art. 29). The Draft further provides for disciplinary actions against directly responsible government officials in those circumstances (Art. 36).

Authoritative coordinating body. Under Article 5 of the Draft, the State Council must establish a coordinating body for standardization efforts (which it has already done in June 2015). In the event of a major dispute over a proposed standard, the body should coordinate different departments and resolve the dispute.

Surveying actual demands. When drafting standards, governmental entities should survey the “actual demands” and solicit the opinions of “relevant administrative departments, enterprises, social groups, consumers, as well as educational and scientific research institutions” (Art. 17).

Hard deadlines. Deadlines should be set for the formulation of standards that are “urgently needed for national economic and social development” (Art. 15).

To recap the essential points made above, under the Draft:

  • More (if not all) sectors will be subject to standardization;
  • Only national standards can be compulsory; industry and local standards are all voluntary only;
  • Enterprise standards no long require governmental approval;
  • Social groups may adopt group standards;
  • Businesses should publicly disclose the standards they implement (along with other relevant information);
  • Standards are likely to be more responsive to actual demands in the future.

The NPCSC is currently soliciting public comments on the Draft until June 14. We expect the NPCSC to review the Draft at least once more. Minor tweaks to the Draft are expected, while major changes are unlikely.

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