IMPRI Team

It is common knowledge that we live in a highly connected, globalised world. In the third decade of the 21st Century, globalisation has been accelerated by advanced communication technology so much so that events in one region of the world influence happenings in another region almost immediately. Bilateral relations, multilateral arrangements, economic sanctions, protectionist policies, and diplomacy are all reliant on the forces of advanced technology. 

Dr Simi Mehta, the CEO and Editorial Director of IMPRI Impact and Policy Research Institute, the moderator of this talk, initiated the discussion by contextualising the role of developing states such as China in the reformation of global governance structures. Dr Mehta added that the role of non-state actors in this reformation of governance structures and policy development required concerted understanding. She highlighted the need to engage with scholars and experts who are well-versed in the field, indicating that this talk was a step in that direction. 

Copy of State of international relations

Examining the Validity of China’s Tech Prowess 

Dr G Venkat Raman, Associate Professor of Humanities and Social Sciences at the Indian Institute of Management, Indore, and speaker of this talk, opened this discussion by examining how there are valid arguments for both validating and denying China as a technology superpower. With what Dr Raman referred to as a latecomer’s advantage, China entered the ‘Age of Implementation’ as opposed to the previous century’s age of discovery.

With the biggest cluster of AI scientists and the largest number of internet users at 800 million, China is arguably leagues ahead of the rest of the world. Chang ‘E -4 , China’s spacecraft landing was done in the far side of the moon. Landing in this part of the moon to obtain data requires a pre-positioned relay satellite which it could achieve successfully. China became the first country to achieve this feat. The prominent positions of Chinese Tech Companies on Global Supply Chains and the indigenisation of nuclear plants and high-speed trains further validate these claims.           

On the other hand, sceptics argue that China’s dependence on the imports of semiconductors, and the fact that only 22% of Chinese companies hold the market capital of digital platforms do not support these claims. Furthermore, China’s tendency to cut itself off from the wider world where technological developments are concerned and the strong edge the US and EU have over China’s 5G tech and Qualcomm computing further disprove this claim.                                                                   

That said, the valid indicators of China’s tech prowess outweigh the scepticism. Dr Raman shines light on how China’s massive domestic market allows it to occupy a pole position on Global Supply Chains. The national industrial policy favours funding large Chinese tech firms while placing higher taxes on foreign investments in China. In spite of the authoritarian and regulated policies, innovative flexibility and generous grants foster a culture of innovation.

China is building a completely self-reliant technology industry in an attempt to further cut trade ties internationally. According to the 3rd pillar of the Chinese Belt and Road Initiative, an infrastructure development plan in nearly 70 countries, investments to develop 5G networks and undersea cables have been boosted.

Due to the fact that there is no western involvement, the possibility of an increase in data monitoring is seen as a threat by many. With this massive reconfiguration of supply chains, China has become the largest producer of chips in recent years. Dr Raman elaborates on how Global Tech Value Chains have seen a major realignment as Chinese companies have begun to insulate themselves to avoid potential and actual pressures from American players. 

The International Tech Regime

Quoting Werner Von Siemens the, 19th century German Industrialist and Innovator, “One who owns the standards owns the market,” Dr Raman draws parallels to China’s geopolitical tactics to manipulate tech markets. This goes on to prove that the standards are no longer set by the West. Surely not when Chinese firms are all set to export 5G and advanced AI tech to about a hundred countries.

This has allowed China to have a larger say in international bodies under the UN that regulate technological exchanges, and other standard-setting bodies such as the International Telecom Union through which it enhances interest in its tech firms. The current chairperson of the International Telecom Union is Zhao Houlin, a Chinese official elected for the second term in Jan 2019.

China has been using this growing monopoly over technology to influence governance as well. Its growing technology prowess to influence the framing of the newly emerging technology regime and in the process influencing global governance outcomes. One Connect, a Chinese financial cloud service, has been successful in rewelding pipelines channelling money into developing countries in Africa and Asia. “It is kind of like waging a proxy battle against US giants,” Dr Venkat Raman states.

China has launched CIPS, an interbank messaging system that will allow the easing of international payments in the Yuan. “Alibaba and Tencent have already built a parallel banking system,” Dr Raman adds. ALIPAY, a digital wallet service, already in use in 56 countries, tactically has bought minority stakes in the wallets of 9 Asian jurisdictions, allowing it to influence the industry while also avoiding paying for licenses. 

In the post-covid era, large technology firms are playing an increasingly important role as allies in foreign policy formulation. Western tech firms are also looking at the Chinese model for inspiration where the state plays an important role in funding, in order to compete with Chinese giants. This has massive ramifications for the realignment of state-business relations.

By their shrewd use of Intellectual Property rights and other efforts made to prevent foreign dominance of technology in areas of key significance, China has built a monopoly in the field. The State’s efforts have greatly harmed American and other Western interests in the high-tech field. The way the trends are moving, we are looking at a certain kind of balkanization of the internet, Dr Raman remarks. 

With the number of Chinese apps in international digital markets that could potentially relay back tons of personal data, there is increasing competition for digital real estate. The Internet of Things is emerging as an area of technological control, wherein the more stakes one holds in global IoT, the more geopolitical advantage they have.

Black-box AI algorithms are another area of concern. These are systems that generate results with accuracy but mysterious reasoning, which many scholars think could be used for racial profiling. “One is thinking of a world where human rights could be significantly compromised.” especially as China shares this technology, “there is a threat to liberal values,” Dr Raman warns. With the increase in the possibility of this ‘Weaponized Interdependence,’ the USA has retaliated with a series of sanctions, threatening trade partners to change trade policies with China and delisting Chinese firms.                                                                                                                                                                                                 

Although strong arguments have been made for the solidity of China’s tech prowess, experts in the field have identified certain disadvantages to the existing robust system built by the state. The top-down state-led efforts in developing robotics, quantum computing, and AI may fail after a certain point if no efforts to allow bottom-up efforts are made. The stifling of bottom-up efforts of innovation may lead to the system’s eventual decline. Chinese tech companies may face economic and political pressures as they globalise with Western competition. Furthermore, if the US re-energises its digital diplomacy tactics, China will be at a disadvantage.

While disadvantages are discussed, it is equally important to discuss possible threats that the world will face with China’s growing status as a cyber superpower. Experts are certain that a digital divide that has already been created will only grow in the international cyberspace. Moreover, Beijing will reap diplomatic and intelligence-related benefits that once flowed to Washington DC, at a higher risk to national security. The cost and complexity of doing business in China for foreign investors will increase highly, and experts believe Intellectual Property Rights violations will increase manyfold. Dr Raman concluded by stating that rival spheres of influence will only grow more hostile.

The geo-epistemological advantage of tech companies is tremendous for China’s chip production. The state-led development initiatives’ drive to export transportation technology and nuclear technology will come at a high cost. “Other countries may begin to take a leaf out of China’s book to push for state-led innovation and to what extent liberal values will be contested is something we will have to look out for,” Dr Raman noted.                                                                                             

The Digital Global Order

Mr Kazim Rizvi, Founding Director of The Dialogue, joined to note that as China has been building a very strong firewall of data, the state has been preparing for the digital revolution wherein data and digital power will dictate the new digital global order. “China has been very focused on making sure that it has all the right amount of data and a very strong cybersecurity ecosystem,” Mr Rizvi remarked. India has joined the bloc of the west with the US and the EU, where the Rule of Law and democratic values are supposedly honoured, while on the other hand, China remains opaque in its functioning, especially with the amount of harvested data it possesses.

For these reasons, the western bloc has been preventing the use of Chinese 5G hardware systems for national security concerns. “The development of domestic 5G hardware is critical for India to prevent any challenges and threats which can emerge from China,” said Mr Rizvi. Referring to the banning of Chinese apps in the Indian digital market, Mr Rizvi adds that the government has taken a correct move from a strategic point of view, to prevent the possible mining of Indian data to Chinese firms.

In addition to building robust cybersecurity infrastructures, such as cutting-edge encryption and firewall mechanisms, India needs to develop a strong cybersecurity policy and must collaborate with the Quad, and the western bloc, Mr Rizvi opines. “Developing mechanisms where the intelligence of India, US, UK, EU, etc can work together to counter Chinese threats, and developing stringent policies to safeguard cybersecurity along with preventing technological pushes from China to protect national interests,” Mr Rizvi concludes, are steps in the right direction. 

Mr Amit Dubey, Founder of the India Future Foundation, and National Cybersecurity expert observed that China has begun to be known for softer innovations and developing strong technology sectors only in the past 10-15 years. Investment and innovation in high-tech fields have exceeded over 1 Trillion USD, which is a matter of grave concern for the rest of the world. “We can also learn from China, as some of our weaknesses are similar to China’s,” Mr Dubey noted. “If we do not take the opportunity to focus on our strengths, we will lag behind much like the US is.”                  

India is still regarded as a labour country, but it needs to build its innovation and tech sectors. However, India’s biotechnology efforts to develop Indian vaccines in the same duration as western firms have created a great impression globally. But India’s lagging AI sector, cybersecurity, and other technologies are holding us back, and the inability to develop these fields will only allow digital and cybersecurity threats to grow, Mr Dubey concludes.                            

Referring to the ownership patterns of Chinese technology firms, Professor Ritu Agarwal, Associate Professor at the Centre for East Asian Studies, Jawaharlal Nehru University, highlighted that state-controlled and state-funded systems are unique to China’s tech sector. China’s advantage is reliant on policies that dissuade foreign tech presence in China, according to which state-directed panels oversee developments and require sharing of innovations and research. “These restrictions have created a niche area for China to become a technological superpower.”

Prof Agarwal notes. “The idea is that most of the innovations and inventions that China has developed over the years are through the kind of technologies that they have appropriated from foreign firms and other countries,” or even through student fellowships that they generously grant, Professor Agarwal adds. She argues that the innovative capabilities of China are not as strong as they seem when one considers the similarities between Chinese telecommunications and other technologies with already existing ones, such as Korean smartphone technologies.

What is unique, however, is the state-sponsored upscaling of the innovation market. China’s inability to follow rules and regulations in the international sphere contradicts the Chinese Communist Party’s aspiration to dominate the global tech market. These need to be aligned to be taken seriously as a global player, Professor Agarwal states.

Ms Ambika Vishwanath, Co-founder and Director of Kubernein Initiative, posed questions on the futures of countries like Japan and South Korea in the emerging digital divide from larger geopolitical perspectives.                                                                     

Dr Raman brought the discussion to an end by highlighting the importance of looking at how China views the world. He adds that while Chinese policies are criticised, American actions are overlooked or forgotten. The advantage of China’s opaqueness in policy formulation and action is also their biggest threat, Dr Venkat Raman concluded. Dr Simi Mehta thanked all the participants and concluded the insightful discussion with a vote of thanks.

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