/China’s Global Digital Silk Road is Arriving in the Middle East and Goes Way Beyond Huawei (via Qpute.com)
China's Global Digital Silk Road is Arriving in the Middle East and Goes Way Beyond Huawei

China’s Global Digital Silk Road is Arriving in the Middle East and Goes Way Beyond Huawei (via Qpute.com)


Last Thursday, the Fourth China-Arab states Expo opened in Yinchuan, a city in Northwest China. Officials made much of the historic relationship between East Asia and the Middle East and referred liberally to a time in which the Silk Road bridged advanced ancient civilisations through ties of commerce and diplomacy.

It is these bridging ambitions that China has sought to realise in recent years through its flagship foreign policy project, the so-called Belt and Road Initiative, a $1 trillion infrastructure development scheme to be rolled out across up to 60 countries .

China has significantly increased its presence in the Middle East, and in the Arab states in particular in recent years through initiatives such as the China-Egypt Suez Economic and Trade Cooperation Zone, the provision of significant levels of direct foreign investment in infrastructure and reconstruction efforts in Syria, Iraq and Libya, and through attempts to more closely economically integrate the region with its Central Asian neighbours.

Earlier this year, the so-called China-Arab States Cooperation Forum, which was first established in 2004 to foster better exchanges between Beijing and members of the Arab League was upgraded to the status of a ‘strategic partnership of comprehensive cooperation and common development’.

Whilst Chinese port, rail and road upgrades have long caught the attention of regional analysts, the future of China-MENA relations may be based less on iron and steel and more on silicon.

Whilst Chinese port, rail and road upgrades have long caught the attention of regional analysts, the future of China-MENA relations may be based less on iron and steel and more on silicon. Alongside the Yinchuan Expo a special conference dedicated to a so-called ‘Online Silk Road’ was attended by business and political leaders from the Arab world and their Chinese counterparts.

Initiatives like this, and the Chinese led Digital Economy International Cooperation Initiative in which the UAE, Saudi Arabia, Turkey and Egypt have agreed to expand online cooperation with Beijing make one thing very clear: the historic ‘silk road’ of the past is being overlaid by an emergent ‘digital highway’ which may dictate the economic and political future of the Arab world.

the Chinese led Digital Economy International Cooperation Initiative in which the UAE, Saudi Arabia, Turkey and Egypt have agreed to expand online cooperation with Beijing make one thing very clear: the historic ‘silk road’ of the past is being overlaid by an emergent ‘digital highway’ which may dictate the economic and political future of the Arab world

Plans for a so-called Digital Silk Road were first introduced by Chinese foreign policymakers in March 2015. A recent report by the Mercator Institute for Chinese Studies, the largest European think tank on China issues, notes that the emergence of the Digital Silk Road initiative reflects the confluence of two important objectives for the Chinese regime.

Firstly, the Chinese Communist Party has been particularly keen to promote the growth of home-grown IT champions and reduce technological dependence on overseas partners, particularly the United States. Beijing has channelled massive amounts of capital through state guidance funds into emerging technologies, a policy which is now paying dividends.

Chinese telecommunications giants lead the world in emerging 5G technology, China spends at least ten times as much on quantum computing research and development than the US and plans to have established at least 50 academic and research institutes in artificial intelligence by the end of 2020. In the AI sector alone, China filed 30,000 patents last year, triple the amount of American corporations.

Most importantly, in regard to future trends, China is home to more than a third of the world’s ‘unicorn’ companies, privately held start-up companies, largely in the technology sector valued at over $1 billion US dollars. Home grown technology companies such as WeChat, Baidu, Alibaba, and Tencent now rank among the world’s most profitable corporations. Yet aware of the saturation of the Chinese domestic market and the need for expansion to keep profits coming in, the Communist Party has more recently turned to securing a second objective.

Chinese telecommunications giants lead the world in emerging 5G technology, China spends at least ten times as much on quantum computing research and development than the US and plans to have established at least 50 academic and research institutes in artificial intelligence by the end of 2020. In the AI sector alone, China filed 30,000 patents last year, triple the amount of American corporations.

China’s National Informisation Strategy, first slated in 2016 calls on Chinese digital corporations to ‘Go Out’ into the world and support the creation of a ‘Digital Silk Road’. Developing commercial markets overseas is seen as key to the expansion of China’s booming digital economy.

Chinese technology giant Huawei is an emblematic success story which attests to the successful achievement of these two economic aims. Huawei, transliterated as ‘China Doing’, was founded as a small-scale company producing phone switches in 1987. By the early 2000s, the Chinese government was nurturing the corporation and helping it successfully diversify.

Between 2014-2018 Huawei revenues more than doubled.

By later in the decade, Huawei was ready to expand beyond Chinese borders and emerged as a bit player in a global telecommunications market dominated by American and European providers. Yet by midway through the present decade it was experiencing tremendous becoming growth- revenues more than doubled between 2014-18.

By 2017, Huawei overtook Ericsson to own the largest global market share in mobile infrastructure, and in 2018, it became the number one seller of mobile phones, beating out Apple in the process. Huawei now has its own semi-conductor subsidiary, HiSilicon, to reduce its dependence on American and Japanese parts and is in the process of developing its own Android-like operating system.

Political and ideological considerations also weigh heavily on China’s digital ambitions. A modernisation agenda focus on high-tech development is designed to restore the country to its rightful place in the global innovation hierarchy, a position that party historians claim was lost during the 1800s as European empires encroached on Chinese territory, stymied economic development and turned China into a vassal state during the ‘century of humiliation’ before the Communist Party came to power.

A modernisation agenda focus on high-tech development is designed to restore the country to its rightful place in the global innovation hierarchy, a position that party historians claim was lost during the 1800s as European empires encroached on Chinese territory

Further, control over critical infrastructure and monopolising on the global means of communication will allow China to project discursive and political power well beyond its borders. Chinese fibre optic cables now carry information throughout the world and the country plans town or supply 25% of cables globally over the next decade. Control over underseas cables is vital to the global flow of information- indeed 95% of all international data is carried by such cables. Huawei is currently building or improving nearly 100 of them.

Chinese information and communications technology firms are currently making significant inroads in regions where digital penetration is low. As Jon Hillman, a Senior Fellow with the Centre for Strategic and International Studies, a Washington based think-tank notes, ‘Chinese forms are quite active in Africa. They excel in rural areas where Western firms have been hesitant to invest’. One of China’s leading digital initiatives involves the so-called Pakistan East Africa Cable Express (PEACE) cable running from Gwadar in Pakistan with Djibouti, Somalia, and Kenya.

Chinese fibre optic cables now carry information throughout the world and the country plans to own or supply 25% of cables globally over the next decade.

What effect might Chinese digital infrastructure have on the MENA region? A recent report by Chatham House, a British foreign policy think tank, noted that Chinese firms are already making significant inroads in North Africa. Huawei opened its first cloud data centre in Egypt in February 2019. Tangier Tech, Morocco’s much publicised Chinese built smart city is expected to host 200 Chinese companies, many of which operate in high tech activities. In Tunisia, Chinese firms are actively participating in infrastructure improvements and technological development to fulfil the goals of the country’s ‘Digital Tunisia 2020’ strategy.

In the Gulf, Chinese influence is pronounced too. The UAE has established a $10 billion joint strategic investment fund between Abu Dhabi investment group Mubadala and the China Development Bank. The ‘internet of things’ and ‘blockchain’ technologies are central to the ‘Smart Dubai 2021’ project and area areas in which Chinese technologists play a leading role. Chinese online retail platform Alibaba has pledged to build a ‘Tech Town’ with Dubai developer Mereas Holding which will house over 3000 high-tech companies near Dubai’s port, Jebel Ali.

The UAE has established a $10 billion joint strategic investment fund between Abu Dhabi investment group Mubadala and the China Development Bank. The ‘internet of things’ and ‘blockchain’ technologies are central to the ‘Smart Dubai 2021’ project and area areas in which Chinese technologists play a leading role

Middle Eastern e-commerce, likely to be worth in excess of $50 billion USD by next year is largely powered by Chinese companies like Alibaba and JollyChic, the most popular digital marketplace in Saudi Arabia. In the field of financial technology, Chinese companies have also made great strides in the region. Alipay and WeChat Pay, two popular e-pay services, are widely accepted in the region and partnering with domestic tech firms and financial institutions. The expansion of so-called fintech infrastructure is helping to internationalise the Renminbi, China’s currency and its economic institutions.

Chinese President Xi Jinping (L) and UAE Crown Prince Sheikh Mohamed bin Zayed Al-Nahyan (R) arrive at the presidential palace in Abu Dhabi, July 20, 2018 AFP/KARIM SAHIB

Whilst regional analysts should welcome the expansion of digital technology in a region which seeks opportunities to economically diversify and modernise, Chinese initiatives come with their own share of risks. In an economic sense, Chinese companies dominating the digital landscape may hinder the growth of local players. Chinese companies have a considerable head start over regional rivals and may come to dominate emerging digital markets in the region.

More importantly, as Mr Hillman notes the mass collection of data by Chinese corporations ‘can be used for commercial and strategic purposes’. The sharing of information among Chinese companies and between commercial operators and the Chinese government will allow Chinese tech giants to identify and eliminate local competitors.

Governments and regulators in the region would do well to insist on more equitable terms to maximise the benefits of Chinese investment- insisting on specific quotas of local employees and the sharing of useful intellectual property could be a start in this regard. Yet the more serious issues associated with Chinese digital investment are in the political sphere.

More importantly, as Mr Hillman notes the mass collection of data by Chinese corporations ‘can be used for commercial and strategic purposes’.

A number of governments have turned away from the use of Chinese technologies over the last decade due to fears of cybersecurity violations and espionage. Activists in Serbia have turned against the provision of Chinese surveillance technologies, India is seeking to restrict the penetration of Huawei into its own domestic markets, and Australia has recently rebuffed efforts to lay a Pacific cable landing in Sydney, fearing that the security of Australian consumers and citizens information may be jeopardised by Chinese data gathering attempts.

Citizens in the Middle East should look with caution as recent revelations of significant data breaches by Chinese companies in Africa. Confidential data on the It network of the Chinese built African Union headquarters in Addis Ababa was diverted to Shanghai every night between 2012-2017. Chinese digital exports may also feed the growing appetite of regional powers to use digital infrastructure to repress domestic dissent.

Confidential data on the It network of the Chinese built African Union headquarters in Addis Ababa was diverted to Shanghai every night between 2012-2017. Chinese digital exports may also feed the growing appetite of regional powers to use digital infrastructure to repress domestic dissent.

Last year, China hosted sessions on censorship and surveillance for media officials from Morocco, Egypt, and Libya. A recent report by the Council of Foreign Relations argues that ‘under the guise of the BRI, China is seeking to export its authoritarian cyber controls’. China may share information with regional autocrats that proves a boon for autocrats but a disaster for the democratising impulses of the region’s citizen publics.

Chinese digital advancement could prove enormously beneficial in the Middle East and North Africa. It provides opportunities for economic diversification in states long dependent on single exports and the ability to integrate detached local and national economies into a powerful regional network.

Yet to make the most of the opportunities provided by the expanding digital silk road, business leaders, governments and everyday citizens must demand the upholding of civil rights, security and a more level financial playing field in dealings with Chinese policymakers and corporations. Not doing so could prove even more debilitating than refusing to engage with China’s digital ambitions at all.

The views expressed in this article do not necessarily reflect those of Al Bawaba News.


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