China’s Digital Silk Road Taking Its Shot At The Global Stage – Analysis

By Evan Williams

The rise of China has strengthened its resolve to challenge global markets and the United States’ technological hegemony. China has developed into the largest exporter of goods, responsible for almost 30 per cent of manufacturing worldwide. As part of this development, China has united various foreign policy objectives through economic statecraft, using loans and investments as political bargaining chips.

A key part of China’s strategy is the Belt and Road Initiative (BRI), a multitrillion-dollar projectthat facilitates investments in foreign countries. It gambles on risky yet comprehensive loans for developing countries to build key infrastructure.

Yet China’s attention has recently shifted to its rapid expansion of a BRI offshoot — the Digital Silk Road (DSR). The DSR targets digital technologies in developing countries by offering cheap alternatives to Western data systems and security. The DSR is a paramount US concern due to its potential security threats and its challenge to US hegemony.

The DSR initially targeted the technological sector. It invested in 5G fibre optic cables, data centres, e-commerce and artificial intelligence. Many of its initiatives are driven by states’ demand for intrusive surveillance technology, including facial recognition and privacy-invasive cyber infrastructure. China’s goal revolves around capturing national markets of underdeveloped countries.

The DSR initially went under Western radars. It was driven by private investment from Chinese tech companies, unlike the BRI, which is streamlined by central government loans and concentrated decision making.

Yet recently, Chinese foreign policy goals have become intertwined with the DSR. Initiatives by corporations to promote alternatives to digital currencies, such as the Western-backed SWIFT system, rely on China’s central bank. China has also historically used its influence to wield ultimate authority over Chinese companies, regardless of formal ownership. Previously autonomous projects have now fallen under control of the Chinese government.

Developing countries’ increasing reliance on Chinese technology is alarming due to the possibility of surveillance and data collection by Beijing. European countries have mostly opted for more expensive — yet secure — US systems. But poorer nations, primarily in Africa and the Indo-Pacific, are drawn to DSR initiatives due to the compellingly low price tag. China has penetrated African countries’ digital spaces, signing DSR memorandums of understanding with 16 countries.

In one example, Chinese company Cloudwalk signed a strategic partnership agreement with Zimbabwe to facilitate mass domestic implementation of surveillance recognition software. In return, Zimbabwe agreed to send the biometric data of millions of its citizens to China.

In another instance, the African Union found that Chinese hackers had infiltrated their headquarters’ security footage, sending copies of its contents to Beijing. To fix the hack, the African Union was forced to employ technicians contracted through a Chinese company. When China is the ultimate authority over private businesses, there are existential ethical and security concerns for countries dependent on their digital protection.

The Indo-Pacific has also been a target. In 2018 in Papua New Guinea, Chinese tech giant Huawei built a data centre for the government’s entire data archive, using a US$53 million development loan from China’s Exim Bank. It was later discovered that secret government files were stolen, likely by China — as its data was protected by outdated encryption software and an inadequate firewall. Huawei sold Papua New Guinea firewalls that had reached their ‘end of life’ in 2016, two years before the facility opened.

Another target has been Myanmar, which signed a 2018 agreement to rapidly expand its 5G broadband services. China views Myanmar as a critical DSR link between South and Southeast Asia. Using Chinese loans to acquire subpar services from a Chinese company threatens to undermine the security of these already impoverished states.

Chinese corporations have also come up with alternative technologies to Western models, engendering adverse US reactions. In 2012, the United States banned US-based companies from using Huawei equipment due to surveillance concerns. It followed with further sanctions in 2019, which banned the transfer of technology, such as semiconductor chips, to Huawei.

US President Joe Biden’s administration spurred their own semiconductor production by enacting the CHIPS and Science Act in 2022. This distributes US$52.7 billion for research and production in the United States, including US$39 billion in subsidies for private companies. Recipients are prohibited from expanding and conducting joint research initiatives in foreign countries deemed a threat to the United States — including China. Several companies have used the funds to open new manufacturing facilities in the United States while limiting their activities in China.

But worryingly for the United States, years-long sanctions on Huawei and other Chinese companies have not had the desired impact. Huawei was forced to replace 13,000 components and redesign over 4000 circuit boards. The company has manufactured successful domestic substitutes, making its first 5G smartphone with Chinese chips in 2023. This shocked industry experts, who believed China was behind the curve in this sector of development.

The United States is rightly concerned and must also grapple with the DSR’s security implications. Western companies must present cheaper alternatives to programs such as the Chinese ‘safe city technology’, a surveillance network. They must invest in collaboration with developing countries to steer them away from surveillance-susceptible technologies.

The BRI may bolster China’s physical presence, yet the DSR has the raw ability to expose a state’s entire population to digital surveillance. The United States must address the growing potential of China to surveil people across the globe at a micro level.

• About the author: Evan Williams is a student at Pomona College, California.
• Source: This article was published by East Asia Forum