Securing the Global Digital Economy: Beyond the China Challenge
The Intersection of Technology and Global Politics
The TechCrunch Global Affairs Project is dedicated to analyzing the growing connection between the technology industry and international political dynamics.
Expanding Digital Infrastructure Globally
A worldwide effort to upgrade information and communication systems is generating an exceptional need for technological infrastructure.
Both governmental bodies and private sector companies are committing substantial financial resources to broaden digital access across the globe.
Opportunities and Risks of Network Expansion
The rollout of new technologies like 4G, 5G, satellite networks, and fiber-optic cabling presents considerable potential benefits for the countries hosting these developments.
However, significant dangers arise if these networks are established without sufficient protective measures in place.
The U.S. Role in a Secure Digital Future
The United States is positioned to influence the future of the internet and the broader global digital economy.
Success in this endeavor, however, necessitates a shift away from solely confrontational strategies with China.
A more collaborative approach will be crucial for securing a stable and open digital landscape.
China’s Impact Through Network Effects
Access to digital technologies forms the basis for a range of digital services, including fintech and e-commerce, which connect communities with trade and financial opportunities. Startups in regions like Latin America and Sub-Saharan Africa are attracting substantial investment, but their success hinges on a robust and extensive information and communications technology (ICT) infrastructure.
China has emerged as a key provider of ICT infrastructure globally, particularly in developing nations, through initiatives like the Digital Silk Road and the Belt and Road Space Information Corridor. This is largely achieved through significant financial investments in these projects.
However, these investments are not without potential drawbacks. Concerns exist regarding cybersecurity and the risk of manipulation, stemming from the Chinese government’s influence over its technology vendors.
Chinese technology companies are legally obligated to cooperate with the state, including sharing customer data upon request. This raises questions about their ability to prioritize client interests.
Internal Communist Party organizations within these firms also exert influence on decision-making processes. While the Communist Party of China (CPC) doesn't have absolute control, its recent crackdown on tech companies is reducing their capacity to resist government directives.
Despite these political and security concerns, many countries continue to choose Chinese technology due to the economic imperative of network modernization and the often lower prices offered by Chinese firms compared to their international counterparts.
The risks associated with companies like Huawei do not necessarily indicate direct collaboration with the Chinese government. Nevertheless, the combination of legal pressures and instances of engineers engaging in espionage, as seen in countries like Uganda and Zambia, suggest a potential for co-option even within China’s leading ICT companies.
As the digital economy expands, a wider range of data – encompassing personal communications, financial records, health information, and more – becomes vulnerable to a “data trap.”
The CPC’s foreign policy approach increases the likelihood of state intervention. Beijing actively seeks to shape international perceptions and prioritizes “information dominance” to achieve its goals.
Data plays a crucial role in understanding the information landscape and influencing perceptions of the CPC. Consequently, control over ICT infrastructure – the foundation of modern communication – is central to Chinese foreign policy.
Information dominance can also lead to a preference for content and platforms aligned with the CPC, limiting opportunities for local voices. For instance, StarTimes, a Beijing-based media company, has received substantial funding from China’s EXIM Bank to expand its operations in 30 African countries.
StarTimes provides state-run media channels as part of its most affordable subscription packages, effectively promoting a favorable “China story” to local audiences. This often comes at the expense of bandwidth allocated to local perspectives or independent media, free from CPC propaganda.
The U.S. Response to Global Network Expansion: An Ongoing Process
As China’s network initiatives gain traction internationally, U.S. policymakers are now focusing on enhancing vendor security evaluations and bolstering governmental funding for Information and Communication Technology (ICT). The State Department’s Clean Network initiative, initially framed within the Trump administration’s “us versus China” narrative, established vendor-agnostic criteria for evaluating cybersecurity risks and supported the Prague Proposals, which emphasized the non-technical dimensions of 5G security.
Furthermore, the U.S. International Development Finance Corporation (DFC) was restructured to more effectively support digital modernization and network development projects. A notable early success for the DFC occurred in Ethiopia, where a Vodafone-led consortium was chosen over a bid associated with China’s Silk Road Fund, despite existing relationships with Huawei and ZTE for telecommunications supply.
The Challenge of Competing with China’s Scale
These actions demonstrate a U.S. dedication to fostering alternatives in collaboration with partner nations. However, these steps alone might not be sufficient to counter the extensive scope of China’s strategy. China’s approach involves substantial government investments in overseas ventures, coupled with significant subsidies to its technology companies.
Indeed, Huawei once proposed a 5G project at a price point that did not even cover the cost of the necessary components, illustrating the impact of these subsidies. The United States, while aiming to counterbalance China’s influence, should avoid attempting to match its spending or replicate its methods.
A New Path Forward: Sustainable Investment and Innovation
Instead, U.S. leadership should concentrate on mobilizing diverse, sustainable investments and identifying technological solutions to reduce the cost of technology adoption. Offering neutral infrastructure that provides equal opportunities for local economies is also crucial.
A key step would be for the White House to lead the establishment of a multilateral digital development bank. This would increase the resources available to countries seeking to modernize their networks and reinforce the commitments made by the Biden administration under the G7’s Build Back Better World initiative.
Lowering Equipment Costs and Promoting Interoperability
In conjunction with Congress, the Biden administration should also champion initiatives to lower the cost of equipment, enabling sustainable competition with China’s inexpensive offerings. Open RAN for 5G networks provides a prime example of how interoperability in technology standards can result in lower costs compared to traditional network architectures.
Investing in research and development for network technologies that can replace costly legacy components represents another avenue for cost reduction. For instance, deploying fiber-optic cables can be expensive; potential alternatives include wireless optic solutions or the integration of satellite mesh networks with terrestrial systems.
Ensuring a Level Playing Field: Net Neutrality
The White House should also investigate integrating net neutrality principles into network financing projects managed by agencies like the DFC. Implementing net neutrality could yield economic benefits for host nations by maintaining an open digital environment for local media and innovation.
Neutral networks would establish a foundation for a third path, distinct from the criticisms leveled against China’s “digital colonization” and similar concerns regarding the U.S. private sector.
Toward an Equitable Internet for All
Ultimately, a digital network serves as a tool to facilitate communication, content sharing, services, industry growth, and innovation. While currently a limited number of countries provide ICT infrastructure to a majority of the world, access to the opportunities it offers should be universally available.
A reimagined approach to digital modernization, grounded in open participation, can not only mitigate the costs associated with China’s cyber and influence capabilities but also pave the way for a more equitable internet for everyone.
