For a nominally communist country, China displays a remarkable understanding of capitalism. Its savvy, which has brought it to the cusp of overtaking Japan as the world's second-largest economy, is not limited to how markets work. China's policy towards technology companies shows it knows how to tilt markets to its advantage – to the disadvantage of others.

For a decade Beijing has been making steadily stricter demands on producers of information security products such as encryption software, smart cards and secure routers. Compulsory certification and domestic technology standard requirements in effect force suppliers to share their technology with the government. Foreign companies wanting access to the breathtaking growth of China's market have little choice but to comply.

Chinese leaders know this. There is all reason to see their policies as a conscious strategy to use China's economic girth to shift technology standards by making it too costly for the industry not to adapt.