CNBC.comSurveillance fears cloud China’s ‘Digital Silk Road’
Chan Jia Hao and Archana Atmakuri 4 March 2019
Summary
India, in an attempt to upgrade its technology, has in recent years bolstered its relationship with China, particularly in telecommunications and digital technology. Despite perceptions of rivalry, China-India synergy in digital technology shows there is great potential for cooperation in their relations. While both India and China seeks to expand its technological influence in South Asia, it will be imperative for New Delhi to find a balance between both a competitor and beneficiary of Chinese technology in the region.
Introduction
The year 2018 experienced the rise of artificial intelligence (AI), 5th Generation (5G) mobile technology, and digital infrastructure around the world. However, with the rise of such emerging technologies, governments began to implement greater restraints on their spread, starting with the United States’ (US) proposal to establish sweeping export controls over a range of ‘emerging and foundational technologies’. This was followed by similar proposals in the European Union (EU).
Tensions grew within the international community in December 2018 when the global chief financial officer of Huawei Technologies, Meng Wanzhou, was arrested in Canada at the request of US authorities. While initially accused of violating sanctions against Iran, scrutiny on Meng’s case intensified when the US accused Huawei of intellectual property theft.[i] A number of countries, including the United Kingdom, Japan, Australia, New Zealand and Canada swiftly ordered reviews of the Shenzhen headquartered company’s 5G technologies in their respective countries, citing national security concerns.
India, however, was an exception. Unlike its friendly allies like Japan and Australia, it placed no ban on Huawei and has continued to expand its technological transfers with China. More often than not, New Delhi and Beijing relations are viewed through a competitive lens in the case of the Digital Silk Road.
This paper therefore first reviews India’s quest for tech hegemony and China’s digital silk road in South Asia. Thereafter, it discusses India’s need to find a balance in its dual role – as beneficiary of China’s technology in recent years, while remaining as its competitor in technology promotion within South Asia.
India’s Technological Transfers in its South Asian Neighbourhood
As India rises on the global economic stage, India’s technological influence and participation worldwide has increasingly become well established, primarily in its space research. Globally, the Indian Space Research Organisation (ISRO) ranks as the fifth top space research organisation. ISRO has also been instrumental in bridging India with the international community – to date, India is signatory to over 30 bilateral agreements with foreign space agencies and a party to all five major international treaties on outer space activities. In the last two decades since 1999, the ISRO also reportedly helped launch over 230 foreign satellites of 28 countries.[ii] Long before Modi’s ‘Act East’, India’s ‘Look East’ policy even saw the ISRO engaging closely with its Indonesian space agency counterpart in 2002.[iii]
However, India’s global tech position has not gained that level of prominence and collaboration among its own South Asian neighbourhood. Consequently, under Indian Prime Minister Narendra Modi’s efforts in promoting its “neighbourhood first” policy, India offered to build a regional satellite for all SAARC countries. At the 18th SAARC Summit in Nepal in November 2014, Modi envisioned that, “…India’s gift of a satellite for the SAARC region will benefit us all in areas like education, telemedicine, disaster response, resource management, weather forecasting and communication…”.[iv] While Pakistan eventually did not partake in the programme, the South Asia Satellite generally received positive reception from its participating South Asian neighbours since its launch in May 2017. With the satellite, Bhutan managed to expand its Bhutan Broadcasting Service television and radio channels in remote areas.[v] Bangladesh also pledged attempts to complement its own national satellite with the one India provided. Benefitting from the South Asia Satellite, Afghanistan further requested India for the development of a special satellite.[vi] As of January 2019, the ISRO is also set to launch five ground stations and more than five hundred small terminals for its neighbours – Sri Lanka, Bhutan, Nepal, Bangladesh and Maldives.[vii] Seen as an extension of the South Asia Satellite, the ground stations can help to further enhance applications such as television broadcasting in remote areas.
Observers have however, questioned how much more, apart from its launching of the South Asian Satellite and the potential of sharing of the Indian Regional Navigation Satellite System (NAVIC), that India can offer to its South Asian neighbours as opposed to China’s heavily invested digital silk road.
China’s Digital Silk Road in South Asia
The Chinese Digital Silk Road first emerged in
a March 2015 white paper by the National Development and Reform Commission,
Ministry of Foreign Affairs, and Ministry of Commerce of the People’s Republic
of China. Previously known as the ‘Information
Silk Road’, it was first introduced as one of the sub-goals of facilities
connectivity.[viii]
In that white paper, the need to establish international technology transfer
centres was highlighted, along with the development of cross-border e-commerce
and other modern business models. The concept further developed in July 2015,
at the China-European Union digital cooperation forum, seen as parallel to the
BRI. Already, the traditional BRI encompasses a ‘New Silk Road’, developed from
an impromptu Warsaw Summit in October 2011 between former Chinese Premier Wen
Jiabao and 22 heads from Central and Eastern European (CEE) countries. At the
forum, participating Chinese delegates proposed Chinese and European internet
companies to invest and lead in the network infrastructures of a ‘Digital Silk
Road’.[ix]
But while the digital silk road had appeared to be European centric, Chinese policymakers reaffirmed the nodes of digital networks across most BRI countries during the ‘Leaders Roundtable of the Belt and Road Forum for International Cooperation’’ in May 2017. The digital silk road proposed that since China holds a competitive advantage position over other countries in the traditional Belt and Road Initiative (BRI) especially in its 4G and 5G network standards, Chinese companies can extend cooperation with these countries to fully develop their digital economy.[x] The expansion of Chinese telecommunication goods and services followed suit. Domestically, China Mobile, China Unicom and China Telecom, the three state-owned telecommunication companies have planned to invest approximately US$180 billion (S$246.73 billion) in creating 5G infrastructure over a -seven-year period.[xi] This has been seen as continuation of the ‘Made in China 2025 Plan’, in which the State Council has outlined its plans to make key manufacturing sectors fully intelligence through investments, by 2025.[xii]
Externally, Chinese digital silk road involvement in South Asia is gaining traction among Pakistan and Sri Lanka leaders. Under the China-Pakistan Economic Corridor plan for Pakistan’s Digital Future, both sides initially pledge to work on an upgrade fibre optic network to improve bilateral communications. Later, Huawei Marine was observed to have signed an agreement with the Pakistani authorities to construct the Pakistan East Africa Cable Express, which aims to connect Pakistan to Kenya and Djibouti.[xiii] Even as early as 2013, Pakistan had already begun planning to replace its use of the United States Global Positioning System satellite navigation with China’s BeiDou Satellite Navigation System, in cooperation with China.[xiv]
Meanwhile Nepal has also operationalised a joint optic fibre link with China, providing the country new access routes to internet services via China. The Nepal’s joint optic fiber link project with China, and a new China-South Asia Technology Transfer Centre (CSTTC) was inaugurated in Islamabad, Pakistan on July 8 2017. Similarly, Sri Lanka has been preparing for the Chinese navigation satellite system to set up over 10 of its Continuously Operating Reference Stations in the country since March 2017. Bangladesh together with Pakistan is also under China’s leadership in the Asia-Pacific Space Cooperation Organisation.
India’s Receptivity of China’s Technological Influences
India’s position of the Chinese BRI, on the other hand, is known to have shown both suspicion and involvement. In a strong response against BRI, India did not attend the Belt and Road Forum that China hosted in May 2017. In April 2018, India again did not endorse the BRI at the then Shanghai Cooperation Organisation (SCO) Foreign Ministers’ Meeting.[xv] However, India’s continuous involvement in two important establishments of the BRI, the Bangladesh-China-India-Myanmar (BCIM) Corridor and India being one of the founding members of the Asian Infrastructure Investment Bank (AIIB), continues to raise the stakes of Delhi policymaker’s receptivity towards the BRI.
Likewise, India’s position of China’s technological influences showed similar elements of both suspicion and involvement. Indian policymakers have been struggling with Chinese technological influence as it comes with its caution of its receiving Chinese technological inflows. As early as 2010, India had blocked several of its domestic carriers from importing Chinese telecoms equipment over suspicions of spying technology, capable of intercepting government communications.[xvi] Then in 2013, India’s Department of Telecommunications (DOT) began establishing the testing of spyware and bugging softwares in telecommunication kits from Huawei and ZTE.[xvii] More recently in December 2018, India’s Telecom Equipment and Export Promotion Council (TEPC) further called on National Security Advisor, Ajit Doval, to ban equipment purchase from Chinese companies like Huawei, ZTE and Fiberhome, citing security concerns.[xviii]
Yet, India is unlikely to join the developed countries in their quest to curb Huawei and Chinese technologies in general. Notwithstanding the TEPC’s move, Manoj Sinha, India’s Minister of Communications recently (5 January 2019) announced that there has been no proposal by the government to ban telecom equipment from Huawei.[xix] This comes as the Government of India had announced, earlier in September 2017, on setting up a High Level 5G Indian 2020 Forum to formulate roadmaps and action plans for the ‘5G India 2020’ – a governmental aim to roll out 5G networks across India by early 2020.[xx] As of October 2018, Huawei India Chief Executive Officer, Jay Chen, has also acknowledged Huawei’s invitation from India’s Department of Telecommunications (DoT) to conduct 5G field trials.[xxi] Even following Huawei’s international controversy in December 2018, the Cellular Operators Association of India (COAI), the telecom industry association, has continuously urged the Department of Telecommunications to allow Huawei to assist operators and industry build 5G capabilities as long as they remain fully complaint of government requirements.[xxii]
Chinese officials have also reported that China has invested over $8 billion in India bilaterally in 2017, the highest so far, of which investments in the Information and Communication Technology (ICT) sector is growing.[xxiii] As Chinese spokesperson for the ministry of commerce, Gao Feng, said in an interview that India has become an important market for investments, Indian and Chinese startups have evidently taken tentative steps in establishing a new alliance to provide a platform to facilitate closer linkages. For instance, around 20 Indian start-ups and 150 Chinese investors gathered at the Government of India’s first start-up event in Beijing, held at the Indian Embassy in 2018 and organised by the Startup India Association along with Venture Gurukool and Sino Global Capital.[xxiv] Chinese and Indian tech companies have also been building up substantial partnerships. For instance on e-commerce, Alibaba Group have invested in Snapdeal, Big Basket, Ticket New and One 97 of at least US$620 million collectively between 2015 to 2017. Separately, Tencent have invested over US$1.2 billion collective in Flipkart, Pep, Byjiu’s classes, Ibibo Group, Hike and Practo.
Towards the back of its technology sector value chain, India also sees an increasing number of Chinese firms establishing themselves in various parts of the country. Several Chinese tech companies, as part of establishing manufacturing plants in India, are creating jobs. For instance, China’s Xiaomi Corp’s component supplier Holitech Technology reportedly is set to invest about $200 million over three years to set up a plant in the Southern state of Andhra Pradesh which would create about 50,000 jobs in India.[xxv] Similarly in Greater Noida, Chinese smartphone maker Vivo Mobile’s new plant will create about 5,000 jobs.[xxvi]
Furthermore, Chinese smartphone companies are taking over the Indian domestic smartphone market. More than half of the smartphones sales market in India is currently dominated by four major Chinese companies- Xiaomi, Oppo, Vivo and Honor – and Indian consumers have reportedly spent more than Rs 50,000 crore (approximately US $6 billion) in FY18 on purchasing smartphones almost double of the previous financial year.[xxvii] The Chinese phones were already coming from a 4G-dominated area, leaving local Indian competitors such as Micromax, Lava and Intex brands behind. India’s smartphone market is seen as an important gateway for perpetuating Chinese technology transfers, especially in the areas of Internet of Things and 5G connectivity.
Conclusion: Balancing India’s Double Role as a Beneficiary and Potential Competitor of Chinese Technology in South Asia
Contrary to the arguments of mere hegemonic competition, India and China have displayed some synergies in digital technology lately. New Delhi is clearly interested in expanding its technological influences globally and regionally. However, it is far behind China. Consequently, in an attempt to upgrade its technology, India has bolstered its relationship with China, particularly in telecommunications and digital technology. On one hand, this could further boost New Delhi’s ‘Make In India’ policy as far as electronic components and finished goods are concerned. On the other hand, Delhi’s policymakers are aware that the Digital Silk Road may be seen as an extension of the ‘Made in China 2025’ plan. The Digital Silk Road’s rising influence in South Asia suggests China’s emerging tech leadership role in the region that Delhi otherwise seeks constantly through its “neighbourhood first” policy. In the long run, it will be an imperative for Delhi policymakers to work with China, while enhancing and promoting India’s own tech industries region wide.
. . . . .
Mr Chan Jia Hao and Ms Archana Atmakuri are
Research Analysts at ISAS. They can be contacted at chanjiahao@nus.edu.sg and archana@nus.edu.sg
respectively. The authors bear full responsibility for the facts cited and
opinions expressed in this paper.[xxviii]
[i] Julie Gordan and Steve Stecklow, ‘ U.S. accuses Huawei CFO of Iran sanctions cover-up; hearing adjourned’, Reuters (7 December 2018), https://www.reuters.com/article/us-usa-china-huawei/u-s-accuses-huawei-cfo-of-iran-sanctions-cover-up-hearing-adjourned-idUSKBN1O60FY?il=0. Accessed on 23 February 2019.
[ii] ‘PSLV-C42 launches 2 foreign satellites’, Department of Space, Indian Space Research Organisation (16 September 2018), https://www.isro.gov.in/update/16-sep-2018/pslv-c42-launches-2-foreign-satellites. Accessed on 13 February 2019.
[iii] ‘ISRO Signs MOU with Indonesian Space Agency’, Department of Space, Indian Space Research Organisation (3 April 2002), https://www.isro.gov.in/update/03-apr-2002/isro-signs-mou-with-indonesian-spaceagency. Accessed on 13 February 2019.
[iv] ‘Text of Prime Minister’s speech at 2014 SAARC Summit in Nepal’, Narendra Modi Official Website (26 November 2014), https://www.narendramodi.in/text-of-prime-ministers-speech-at-2014-saarc-summit-in-nepal-6941. Accessed on 13 February 2019.
[v] Yeshi Gyaltshen, ‘South Asia Satellite will help BBS expand its reach: MoIC Minister’, BBS (17 November 2017), http://www.bbs.bt/news/?p=84853. Accessed on 13 February 2019.
[vi] ‘Minister Syed Ahamad Shah Sadaat meets Indian Ambassador’, Ministry of Communication & Information Technology, Islamic Republic of Afghanistan (31 July 2017), http://old.mcit.gov.af/en/news/69673. Accessed on 21 February 2019.
[vii] Chethan Kumar, ‘Space diplomacy: India to set up ground stations for 5 neighbours’, The Times of India (3 January 2019), https://timesofindia.indiatimes.com/india/space-diplomacy-india-to-set-up-ground-stations-for-5-neighbours/articleshow/67357464.cms. Accessed on 21 February 2019.
[viii] Suyash Desai, ‘ASEAN and India Converge on Connectivity’, The Diplomat (19 December 2017), https://thediplomat.com/2017/12/aseanand-india-converge-on-connectivity/. Accessed on 13 February 2019.
[ix] Zhao Huanxin, ‘Web Companies asked to support ‘digital Silk Road’’, China Daily (18 July 2015), www.telegraph.co.uk/%20sponsored/china-watch/technology/11764541/tech-companies-tobuilddigitalsilk-road.html. Accessed on 13 February 2019.
[x] 汪巍, ‘数字丝绸之路建设助力经济发展’, Belt and Road Portal (25 November 2017), https://www. yidaiyilu.gov.cn/ghsl/gnzjgd/36420.htm. Accessed on 17 February 2019.
[xi] Deepakshi Rawat and Chan Jia Hao, ‘ISAS Insights No. 521: China’s Digital Silk Road: Implications for India’, Institute of South Asian Studies (ISAS), National University of Singapore, https://www.isas.nus.edu.sg/wp-content/uploads/2018/11/ISAS-Insights-No.-521-Chinas-Digital-Silk-Road-Implications-for-India.pdf. Accessed on 17 February 2019.
[xii] Scott Kennedy, ‘Made in China 2025’, Center for Strategic and International Studies (1 June 2015), https://www.csis.org/analysis/made-china-2025. Accessed on 25 February 2019.
[xiii] ‘Huawei Marine and Tropical Science Commences Work on the Construction of the PEACE Submarine Cable Linking South Asia with East Africa’, Huawei (6 November 2017), https://www.huawei.com/en/press-events/news/2017/11/PEACE-Submarine-Cable-SouthAsia-EastAfrica Accessed on 17 February 2019.
[xiv] ‘Joint Statement – Deepening Comprehensive Strategic Cooperation Between the People’s Republic of China and the Islamic Republic of Pakistan’, Latest Press Release, Consulate General of Pakistan, Zahidan, Iran (23 May 2013). http://www.mofa.gov.pk/zahidan/pr-details.php?prID=1200. Accessed on 26 February 2019.
[xv] ‘India declines to endorse China’s BRI at SCO Foreign Ministers meet’, Business Standard (24 April 2018), https://www.business-standard.com/article/pti-stories/india-declines-to-endorse-china-s-bri-at-sco-foreign-ministers-meet-118042401239_1.html. Accessed on 17 February 2019.
[xvi] ‘India investigates report of Huawei hacking state carrier network’, Reuters (6 February 2014), https://www.reuters.com/article/us-india-huawei-hacking/india-investigates-report-of-huawei-hacking-state-carrier-network-idUSBREA150QK20140206. Accessed on 17 February 2019.
[xvii] Simon Sharwood, ‘India joins list of nations vetting Huawei, ZTE’, The Register (10 May 2013), https://www.theregister.co.uk/2013/05/10/india_to_test_huawei_and_zte_kit/. Accessed on 17 February 2019.
[xviii] ‘Telecom export body seeks ban on Chinese equipment from Huawei, ZTE’, Business Today (18 December 2018), https://www.businesstoday.in/top-story/telecom-export-body-seeks-ban-on-chinese-equipment-from-huawei-zte/story/301778.html. Accessed on 17 February 2019.
[xix] Debarshi Dasgipta, ‘Huawei and the 5G revolution: India gears up for widespread use amid security concerns’, The Straits Times (5 February 2019), https://www.straitstimes.com/asia/south-asia/india-gears-up-for-widespread-use-amid-security-concerns. Accessed on 17 February 2019.
[xx] ‘India Joins Race in 5G Ecosystem, Constitutes High Level Forum on 5G India 2020’, Press Information Bureau, Government of India, Ministry of Communications (26 September 2017), http://pib.nic.in/newsite/PrintRelease.aspx?relid=171113. Accessed on 17 Feb 2019.
[xxi] Danish Khan, ‘China’s Huawei gets DoT support to conduct 5G field trials with Indian telcos, state governments’, Economic Times (ET) Telecom (5 October 2018), https://telecom.economictimes.indiatimes.com/news/chinas-huawei-gets-dot-support-to-conduct-5g-field-trials-with-indian-telcos-state-governments/66084881. Accessed on 17 February 2019.
[xxii] Danish Khan, ‘COAI defends Huawei in India; urges TEPC to not make any security submission to NSA’, Economic Times (ET) Telecom (18 December 2018), https://telecom.economictimes.indiatimes.com/news/coai-defends-huawei-in-india-urges-tepc-to-not-make-any-security-submission-to-nsa/67133546. Accessed on 17 February 2019.
[xxiii] ‘China says its investment in India crossed $8 billion’, Times of India (26 April 2018), https://timesofindia.indiatimes.com/business/india-business/china-says-its-investment-in-india-crossed-8-billion/articleshow/63928323.cms. Accessed on 17 February 2019.
[xxiv] Ananth Krishnan, “India next big thing for Chinese companies, says e-commerce firm Alibaba,” India Today, 11 November, 2017. https://www.indiatoday.in/world/story/india-china-start-up-tech-alliance-beijing-startup-india-association-alibaba-1084146-2017-11-11
[xxv] ‘China’s Xiaomi says parts supplier Holitech Technology to invest $200 million in India’, Reuters (6 August 2018), https://www.reuters.com/article/us-xiaomi-india-holitech/chinas-xiaomi-says-parts-supplier-holitech-technology-to-invest-200-million-in-india-idUSKBN1KR19P. Accessed on 17 February 2019.
[xxvi] ‘Chinese smartphone maker Vivo’s new plant in Greater Noida to create over 5,000 jobs’, Business Today (30 November 2018), https://www.businesstoday.in/current/corporate/make-in-india-vivo-new-plant-in-greater-noida-to-generate-over-5000-jobs/story/296139.html. Accessed on 21 February 2019.
[xxvii] Writankar Mukherjee, “Indians spent over Rs 50k crore on Chinese phones in FY18,” The Economic Times, 29, October, 2018, https://economictimes.indiatimes.com/tech/hardware/indians-spent-over-rs-50k-crore-on-chinese-phones-in-fy18/articleshow/66408152.cms