China is winning the war for global tech dominance
When the United Kingdom announced in July that it no longer would allow the Chinese technology firm Huawei to be part of its 5G telecommunications network, it was considered to be a success for the Trump administration’s lobbying of its closest ally. Other countries such as Australia and Japan also have effectively banned the company, echoing Washington’s fears of a potential national security threat.
Unfortunately for those hawkish on Huawei, the vast majority of the world remains open to using the company’s technology. Huawei has a presence in more than 170 countries, including dozens in Europe, and even Canada has yet to be persuaded to block the Chinese Communist Party-linked company.
This is a reflection of the reality that America finds itself in today — namely, that China appears to be winning the war to build the world’s technology infrastructure.
China’s push to dominate technology is being coordinated through a program called the Digital Silk Road (DSR), a subset of the more widely known Belt and Road Initiative. Launched in 2015, the DSR is a private-sector agenda heavily supported by the state with the aim of extending China’s digital presence abroad, and thereby enhancing its commercial and political influence.
The DSR is answering the demand for connectivity from Asia to Africa to Latin America. Chinese companies have built out much of the world’s digital foundations, including fiber-optic cables and telecommunication network schemes. Data centers have been constructed, and projects set up in smart education and online surveillance. The global pandemic is providing new opportunities for Chinese companies in the fast-growing digital health care sector, with both Huawei and Alibaba sharing their coronavirus detection systems abroad.
Beijing is heavily supporting this expansion. Huawei’s success has been eased by a state-backed credit line that at one point reached $100 billion and made sure that it was able to outbid all its rivals not only on price, but on R&D too. Billions of dollars of loans have been given to countries to buy Chinese tech in the name of development aid, and such is the DSR’s positive impact on global digital infrastructure that the program is now being referenced by the United Nations as a way to advance its own Sustainability Development Goals.
On the face of it, American technology firms are doing very well versus their Chinese counterparts. Microsoft and Alphabet, for example, are far more valuable than, say, Alibaba or Tencent. Yet in the race for the world, many American company boards simply don’t have the appetite to spend money outside of their core Western and allied markets; Oracle, one of America’s tech titans, has just a third of the global presence of Huawei. When American firms do try to invest in emerging market infrastructure, they run the risk of accusations of “digital colonialism.”
Taking a mainly commercial view means that Western companies are being eclipsed by their Chinese rivals across much of the world. This should be a concern for the U.S., given what China wants to do with its tech superiority.
Later this year, we expect the release of the “China Standards 2035” plan, which aims to set global standards for evolving technologies such as the internet of things, artificial intelligence (AI), and 5G over the next 15 years. With Chinese technology infrastructure dominating in so many countries, the 2035 plan will cement China’s standards as the norm and give its companies a significant, and perhaps permanent, business advantage over their American competitors.
The Chinese capture of advanced technologies is happening. Baidu, which is sometimes called the “Google of China,” has developed the world’s first open source autonomous vehicle platform. It now has 130 partners, including many of the European carmakers.
Beijing has aspirations in blockchain, too. It has launched the “Blockchain Service Network” (BSN), a government-controlled platform that it wants to make dominant not only in China, but worldwide. In the half-year since its announcement, the BSN has established a presence in dozens of countries, including Japan, Australia and the United States.
Then there is the internet itself. China has stated plans to replace the technological architecture that has supported the internet for the past half-century with one radically different in form. The design, created by Huawei, calls for a new internet protocol (the so-called “New IP” proposal) that would allow the internet to be controlled by nation states. Although unlikely to be adopted internationally soon, the proposal is a stark reminder of how technology is not an ethics-neutral domain, but instead is underpinned by subjective values that can be challenged.
This is the real issue that Chinese technological control creates. Beijing wants to define the standards of important future technologies such as AI, and the values upon which they are based — a move that will tilt the world away from American commercial and political influence.
The world is hungry for more connectivity, and China is satisfying that demand. America needs its own “Digital Silk Road” equivalent if it is to keep its long-term influence broader than its fellow Huawei hawks.
Sam Olsen is the Singapore-based co-founder of the strategic consultancy MetisAsia and a commentator on Chinese-Western relations. He has lived in Hong Kong and Singapore for a decade. A former staffer of the late Sen. Arlen Specter (D-Pa.), he previously was a campaign manager for Prime Minister Theresa May and a British Army intelligence officer, and he has contributed to U.K. policy on foreign and trade affairs.