Over the past few years, the world has been abuzz with talk of China’s enormously ambitious $1trn Belt and Road Initiative (BRI) - also known as the New Silk Road - that seeks to expand its transportation and energy infrastructure around the world to improve connectivity with the rest of the globe, and perhaps extend both its soft and hard power capabilities.
One of the most important aspects of the strategy, however, has nothing to do with highways, ports or energy. It’s digital and remains relatively unknown. While the New Silk Road refers to a tangible, physical infrastructure network on land and sea across the Eurasian landmass, the Digital Silk Road deals with a largely unseen and in some ways much more abstract infrastructure which goes along with this.
The Digital Silk round will play a substantial role in making infrastructure development more viable and efficient. It will also bring advanced IT infrastructure to the BRI countries such as broadband networks, 4/5G mobile networks, e-commerce hubs and smart cities. The upgrade in infrastructure will allow businesses evolve into digital ones, away from traditional industry. The resulting connectivity will allow SME’s to tap directly into global trading markets, including cross boarder logistics systems.
Chinese companies make their mark
At the forefront of the Chinese digital push are its various telecom companies, who hope to gain global access while at the same time help advance China’s overarching strategic goals. China has also created digital policy frameworks such as the recent Cyber Security Law and Data Protection framework to promote its standards internationally and in particular to countries along BRI.
The Chinese mobile economy is expanding fast as consumers move away from PCs, landline phones and credit cards, and into a smartphone age, including shopping. The five giants of the Chinese internet age – Tencent, Alibaba, Baidu, Xiaomi and Didi – are incredible companies, their sheer scale and access to capital means the smallest movements from any one of them move trends.
China’s rival to GPS
China also intends to extend its coverage of the home grown satellite navigation system (BeiDou) to the 60 plus countries along the BRI by 20220. Currently accurate to around 10m or so (used extensively in China for smartphones, fishing vessels and shared bicycles), the expansion of the satellites network will bring it much closer to the 1m achieved by GPS. Significantly, under military control, the company will allow China to end its dependence on the US GPS network. With BeiDou navigation promising to connect communities currently in a void, many countries have already signed up to embed the technology in infrastructure: Chinese tech giants are no strangers to surmounting the logistical challenges this will bring in installing around developing countries
Security concerns – or not?
Around the world, the expansion of China’s digital footprint has been accompanied by concerns over whether the connections could be used to expand Chinese intelligence efforts or lead to compromises over the privacy of data.
In a world in which connectivity is at an all-time high and trust at an all-time low when Chinese companies enter into a market, it should not be viewed as pure market expansion. These internet giants and telecom companies need to ensure proper data protection and economic data sharing.
The Digital Silk Road is critically important for the sustainable growth of the global economy since it addresses one of the fundamental issues of the 4th Industrial revolution: high speed internet access. Increased connectivity will allow emerging markets to generate data from their businesses, which could potentially become big data in the future. In particular it will be the SME’s along the bath of BRI that will be able to access global markets and improve their operations. What’s clear is that the BRI bridgeheads penetrating its path are digital as well as physical and this will bring larger cyber markets to entrepreneurs allowing them to test and commercialise ideas that originated in small, isolated areas along the route.