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Cyber Dominance
Strategic Vision vol. 9, no. 44 (January, 2020)
China’s Digital Silk Road poses challenges for America’s Indo-Pacific strategy
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A.D. Gnanagurunathan
In an effort to support 5G development, the US DOD recently selected several sites to host 5G development projects.
photo: David Perry
Moves and counter moves aren’t just part of a team’s strategy in sports, they are also part and parcel of international politics as well. Most sporting teams adhere to a playbook to a great extent when they devise their schemas for their games. So, states in their interaction with other states in the international system largely conform to time-tested strategies and agreed-upon norms. However, many times, winning strategies involve pulling a rabbit out of a hat, be it for a game or in international politics.
The ongoing playoffs between the People’s Republic of China (PRC) and the United States, along the regional allies and partners of the latter, is one such situation, where they are testing their strategies out of their respective playbooks. The United States has adopted its Indo-Pacific strategy to maintain and continue its dominance in the region. On the other hand, China is using its Belt and Road Initiative (BRI) to seek influence and gain pre-eminence. The two seem to be heading for a stalemate. At least, that would be the case were it not for China’s Digital Silk Road (DSR), which appears to be the aforementioned rabbit, as the world is hurtling toward a space where data will determine everything, and China is apparently leading the digital race due to its preponderance in 5G technology. Hence, it is important to understand the contents of the Indo-Pacific strategy and DSR and investigate how DSR fares as a strategy compared to the Indo-Pacific strategy.
The first-ever Indo-Pacific Report: Preparedness, Partnerships and Promoting a Networked Region by the US Department of Defense was released on 1 June, 2019. The report boldly identifies China as a revisionist power in the international system. It identifies the Indo-Pacific as the most important region for America’s future, and emphasizes that its allies and partners share responsibility, while affirming its commitment to the region. The United States hopes to achieve its goal of a free and open Indo-Pacific by augmenting its capabilities, strengthening regional partnerships and coalitions, and improving existing alliances in the region.
As a strategic document, the Indo-Pacific Report lacks novelty in addressing its foremost strategic challenger i.e., a rising China. It makes no conceptual departure from Obama’s Pivot to Asia, which was later rechristened the “rebalancing” strategy. Rather, it is largely a reiteration of the 2017 National Security Strategy and the 2018 National Defense Strategy. Meanwhile, China intends to use DSR to elevate itself to an unassailable position where it can influence the setting of new global rules and norms by constructing communication networks across the developing world.
As a net oil and gas exporter, the United States has initiated ASIA EDGE (Enhancing Development and Growth through Energy) to grow a sustainable and secure energy market in the Indo-Pacific region. It languishes on the negotiating table, however. Therefore, the present US Indo-Pacific strategy is, to a great extent, a continuation of the previous strategic initiatives to counter China in the region, and remains unoriginal in terms of its approach and operational modality.
Participants pose at the second annual Belt and Road Forum (BRI) in Beijing. The BRi is closely related to China’s 5G expansion.
photo: Kremlin.ru
China’s DSR was unveiled in March 2015 as an “Information Silk Road” in a White Paper published jointly by the PRC National Development and Reforms Commission, the PRC Ministry of Foreign Affairs, and the PRC Ministry of Commerce. DSR was conceived as a subset of the ambitious BRI, announced in 2013 and to be completed in 2049. Over 60 countries, which together account for two-thirds of the world’s population, have signed on or expressed an interest in BRI. It aims to connect China with the continents of Asia, Europe, the Middle East, Africa, and the Americas, through road, rail, energy pipelines, and sea. The China-Myanmar Economic Corridor and the China-Pakistan Economic Corridor are two important gateways linking China with Southeast Asia, South Asia, and the Middle East. Moreover, China has so far invested US$200 billion in the region as part of the BRI. A successful completion of the BRI would direct a significant amount of global trade and investment China’s way.
The DSR involves a strengthening of the telecom infrastructure, deepening space cooperation, developing common technology standards, and increasing the efficiency of policing systems among BRI countries. China’s trump card appears to be 5G technology, which is likely to propel the industrial revolution 4.0, as its star tech behemoth Huawei is leading the race with more than 36 percent of patents in 5G technology. Cloud computing, big data, the Internet of Things, and artificial intelligence (AI) riding on 5G technology will form the backbone of autonomous vehicles, facial recognition technology, and AI. Dominance in connectivity would allow China to harvest vast amounts of data, which in turn would enable it to exercise greater political influence and accrue economic benefits.
The leaders of Russia, China, and Egypt, from left, before a roundtable discussion at the Belt and Road Forum for International Cooperation.
photo: Kremlin.ru
For example, graphic: Javedpk05 the Chinese companies Huawei and ZTE are engaged in building an information and communications technology infrastructure in Southeast Asia, laying submarine fiber optic cables, and Huawei Marine has engaged in more than a dozen submarine cable ventures in the region. One of China’s flagship digital projects is a 6,200 kilometer submarine cable connecting Pakistan with Djibouti, a joint venture between Huawei Technologies and Britain’s Global Marine Group. Despite their technological capabilities, however, Huawei’s American and European rivals like Cisco and Ericsson cannot match this pace of expansion due to low costs, early-arrival advantage, and comparable quality.
The rapidly growing economies of Southeast Asia (SEA) are filled with 600 million young people, and it is one of the most digitized societies in the world. SEA’s Internet economy was valued at US$50 billion in 2017, and is expected to reach US$200 billion in 2025. Huawei has strategic partnerships with the major telecom companies in the region, especially in the populous countries of Malaysia, Indonesia, and the Philippines. It has already conducted 5G trials in Thailand. Meanwhile, Chinese mobile manufacturers Oppo, Huawei, and Vivo have collectively overtaken long-time market leader Samsung in the region. Such a vast telecommunication network will facilitate the transfer of huge amounts of personal, government, and financial data to Beijing. Any control over the flow of data, digital infrastructure, and favorable Internet governance would have immense strategic implications. As a result, China may be able to achieve one of its most important objectives of influencing global rules and norms.
graphic: Javedpk05
US efforts wanting
In contrast, US efforts on this front are wanting. The United States, as part of the US-ASEAN Smart-Cities Partnership, announced in November 2018 a US$113 million investment pledge in technology, energy, and infrastructure projects in Asia, which pales in comparison to the huge Chinese investments in the digital infrastructure projects in the Indo-Pacific region. Apart from laying fiber optic cables and establishing 5G networks, Chinese e-commerce giant Alibaba and gaming company Tencent are making a big foray into e-commerce and e-pay investment in the region, and gaining ground by outcompeting US companies.
US Air Force personnel integrate cyber operations during a Red Flag Exercise at Joint Base San Antonio-Lackland.
photo: Thomas Spangler
Such large-scale investments in physical and digital projects involving many countries can help China push its plan for the Yuan to supplant the US dollar as the go-to currency for transactions and investment. Moreover, the control of digital assets and transfer of financial data can significantly improve the circulation of the Yuan globally. The Cross-Border InterBank Payments System, or CIPS, is being promoted as an alternative to the US-led Society for Worldwide Interbank Financial Telecommunication System, or SWIFT. This will strengthen China’s hold over the global economic system and increase demand for its currency, the renminbi. In such a case, China would be able to dominate the global economy.
Infrastructure investments
According to an Asian Development Bank study released in 2017, the region will require infrastructure investments worth US$26.2 trillion by 2030. Of these, US$16.1 trillion for East Asia, US$6.3 trillion for South Asia, US$3.1 trillion for Southeast Asia, and US$46 billion for the Pacific is necessary. In addition, it is estimated that China will spend about US$1.2 trillion over the next decade. Moreover, due the difficulties faced by less-developed and developing countries in procuring loans from multilateral development banks for infrastructure finance in terms of gaining approval and stringent conditions for implementation makes the easy loans provided by China’s Asian Infrastructure Investment Bank, China Development Bank, and China Exim Bank all the more attractive, despite apprehensions about a possible debt trap.
The administration of US President Donald Trump, which scrapped the Trans-Pacific Partnership (TPP) as a course correction exercise to counter Chinese investment in the region, enacted the BUILD Act 2018 (Better Utilization of Investments Leading to Development), with an investment portfolio of US$60 billion to encourage private investments in infrastructure projects in the region, barely scratching the surface.
The International Telecommunication Union facilitates governance of a range of communication technologies such as radio spectrums, planning of satellite orbits, networks, and fiber optic cables. Internet Corporation for Assigned Names and Numbers manages the Internet Protocol addresses and domains. Yet, China argues for protecting state sovereignty and non-intervention in domestic affairs, in order to promote “cyber sovereignty”. This fundamentally runs counter to the concept of free and accountable governance by localizing data storage, processing and transfer, and control over Internet content. Such an unfree cyberspace governance model appear attractive to many non-democratic and authoritarian governments in the less-developed and developing world.
Furthermore, China counters criticisms of its ability to use its dominance in 5G networks to influence and coerce other states by pointing out that countries like the United States use the threat of sanctions to curtail American companies’ involvement with foreign entities or governments, which are legitimized by its domestic laws. Furthermore, the Edward Snowden episode highlighted the surveillance programs run by the US National Security Agency and the Five Eyes Intelligence Alliance in association with telecommunication companies and European governments.
Strategy is about making appropriate choices, choosing priorities, and redirecting resources to achieve one’s goals. The US Indo-Pacific strategy relies heavily on its institutional partnerships and military capabilities to sustain its dominance in the region, much as it has been doing since the end of the war. Moreover, its recent efforts to counter China in the region have been ineffective due to limited resource allocation and misplaced priorities. In contrast, China, in addition to augmenting its military power, has apportioned adequate material resources and prioritized ventures toward achieving its strategic objectives as it moves steadfastly to capture cyberspace, which is likely to determine the outcome of interaction among states in the near future.
Dr. A.D. Gnanagurunathan is a MOFA visiting scholar at the Department of Political Science, College ofSocial Sciences, National Taiwan University. He can be reached at gnanagurunathan@gmail.com
