At the time when the pandemic has become an essential reminder of the undeniable role of digital technologies, China has shown itself as a leading technological power, which has been promoting its digital capabilities globally through a wide range of technological instruments, including using the pandemic for its own advantage. Well-known Chinese technology companies have been broadly promoting and implementing next-generation 5G networks, intelligent surveillance systems, telecommunication systems, cloud computing, data centers, e-commerce, mobile payment systems, smart city systems and many other high-tech instruments, which have already made China a leading exporter of communications technology. Launched under the three state-driven initiatives, such as the Belt and Road Initiative (BRI), Made in China 2025 and China Standards 2035, the Digital Silk Road (DSR) initiative has become an umbrella project that promotes China’s digital aspirations worldwide.
Launched in 2015 as part of the BRI, the DSR has become a principal digital policy of Beijing to promote its global vision through technologies. Based on the framework of the Digital Belt and Road Centre of the Fudan University, the DSR has three major objectives. Specifically, (1) improving the regional and international connectivity through developing infrastructure, trade, finance, business and policy; (2) modernizing traditional industries and employment in the BRI countries while opening markets for China’s digital assets; and (3) optimizing the regional industrial structure to form the backbone of a regional community in order to create a global value chain, in which China and not the West plays a central role [Dekker, et al., 2020]. In order to carry out those objectives, large research and development (R&D) and financial investments were provided, which subsequently expanded large-scale export and implementation of digital technologies.
The DSR has already entered into an agreement on digital sphere with at least sixteen countries yet considering that majority of Memorandum of Understandings (MOUs) do not necessarily show whether there are digital realms, the number might rise to over 138 involved countries [Kurlantzick, 2020]. The Fudan University records note that 201 Chinese companies in the digital sphere have implemented 1,334 overseas investment and cooperation projects in the past two years, 57% of which are associated with the DSR. All these accomplishments were made possible thanks to the achievements of Chinese companies, since although the DSR is a state initiative, the Chinese companies are the key implementers of the policy [Dekker, et al., 2020]. Namely, Chinese telecom giants such as Huawei and ZTE, being the largest telecommunication suppliers and major providers of 5G technologies, have been successfully realizing their goal to dominate the 5G market worldwide. Leading Chinese surveillance companies such as Hikvision, Dahua and Huawei are among the major providers of surveillance services and technology among developing nations. The Chinese BeiDou Navigation Satellite System was created as an alternative to the United States’ Global Positioning System (GPS), with the purpose of creating a world-class navigation satellite system to ensure the country’s national security and promote global satellite navigation development by creating the Global Navigation Satellite Systems (GNSS). Tiktok app, smartphone producers such as Oppo, OnePlus, Xiaomi, Huawei, ZTE, drone makers such as DJI and XAG are in great demand, especially among developing nations.
Nevertheless, China’s technological success triggered the ongoing US-China tensions, when the Trump administration initiated a global campaign to boycott leading Chinese companies, blaming Huawei for its security issues. The U.S. government even filed a criminal case against Huawei for the theft of technology and blocked its products in the domestic U.S. market, along with its 70 affiliate companies [Muratbekova, 2020]. Consequently, the increasing dominance of Huawei in the global telecommunication market that risks the U.S. leadership, especially in 5G technologies, has been among the triggering factors of the US-China strains. It seems that the Biden administration has no choice but to seek for alternatives to compete with the Chinese DSR at home and globally, since China’s assertive digital diplomacy has been fostering towards subjugating the digital infrastructure.
Moreover, the ongoing pandemic has led to increase in demand for digital technologies, when within a few months’ time, companies were forced to accelerate their digitalization by three to four years, while their portfolio of digital products was accelerated by up to seven years [McKinsey, 2020]. China has indeed widely used these advances by promoting its digital solutions, providing its surveillance systems and encouraging its digital health technology solutions. Specifically, in addition to providing innovative solutions for patient treatment, Beijing facilitated its efforts to harness Big Data and Artificial Intelligence (AI) both for business and for healthcare, promoted its surveillance tools and continued to implement its infrastructure projects halted due to restrictions caused by the pandemic. For instance, China has started laying the final leg of a cross-border fiber optic cable in Pakistan, which links it to a cable in the Arabian Sea. Executed as part of the China-Pakistan Economic Corridor (CPEC) project, the PEACE cable is designed to provide the shortest direct internet route bypassing India, which is expected to reduce Pakistan’s exposure to internet disruptions [Nikkei Asia, 2021]. Given that China already owns or supplies over 11% of existing cables and 24% of planned cables worldwide, the PEACE cable would be another success of the Chinese efforts [Wheeler, 2020].
Overall, by developing next-generation telecommunication infrastructure, smart city technologies and surveillance systems, Data Centre and Storage Infrastructure and other high-tech instruments, Beijing seeks to advance its role in telecommunication governance of the internet and cyber regulations. If on the one hand, China sees that hi-tech technology is an area where it can compete with the U.S. for technological leadership, on the other hand, Beijing is already a number one for emerging markets due to affordable prices and decent quality of products. Well-known advanced Chinese technologies are likely to remain attractive for developing markets, despite the security and quality claims presented in the West. Among them is the Central Asian region, where Chinese companies have the strongest presence due to their long-term credit structures and a high tolerance for financial risk.
Summarizing China’s progress in the digital sphere, it could be noted that the pandemic has contributed to China’s aspirations for technological excellence by providing high-tech solutions for highly demanded purposes. At the same time, it gives Beijing the basis that China’s success in the communications and IT sector, be it telecommunications networks, surveillance systems or AI solutions, will contribute to transforming Beijing’s position into a more important standard-setting role.
References:
Dekker, Brigitte, Maaike Okano-Heijmans and Eric Siyi Zhang (2020). Unpacking China’s Digital Silk Road. Clingendael Report. Retrieved from https://www.clingendael.org/publication/unpacking-chinas-digital-silk-road. Accessed on 22.02.2021.
Kurlantzick, Joshua (2020). China’s Digital Silk Road Initiative: A Boon for Developing Countries or a Danger to Freedom?. Retrieved from https://thediplomat.com/2020/12/chinas-digital-silk-road-initiative-a-boon-for-developing-countries-or-a-danger-to-freedom/. Accessed on 22.02.2021.
Muratbekova, Albina (2020). Geopolitics versus Technology: the Case of Huawei. Retrieved from https://eurasian-research.org/wp-content/uploads/2020/10/Weekly-e-bulletin-07.09.2020-13.09.2020-No-271.pdf. Accessed on 22.02.2021.
McKinsey (2020). How COVID-19 has pushed companies over the technology tipping point—and transformed business forever. Retrieved from https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/how-covid-19-has-pushed-companies-over-the-technology-tipping-point-and-transformed-business-forever#. Accessed on 22.02.2021.
Nikkei Asia (2021). China builds Digital Silk Road in Pakistan to Africa and Europe. Retrieved from https://asia.nikkei.com/Spotlight/Belt-and-Road/China-builds-Digital-Silk-Road-in-Pakistan-to-Africa-and-Europe. Accessed on 22.02.2021.
Wheeler, Andre (2020). China’s Digital Silk Road (DSR): the new frontier in the Digital Arms Race? Retrieved from https://www.silkroadbriefing.com/news/2020/02/19/chinas-digital-silk-road-dsr-new-frontier-digital-arms-race/. Accessed on 22.02.2021.
Note: The views expressed in this blog are the author’s own and do not necessarily reflect the Institute’s editorial policy.