Of silicon and silk

October 23, 2018

Hero Image

October 23, 2018
Michael Gold

Managing editor

Michael is a managing editor at Economist Impact. Although Michael has roots in Montreal, he grew up in Palo Alto, California and attended Yale University, where he majored in anthropology. Prior to joining the Economist Group, Michael was a correspondent for Reuters in Taipei, where he covered the technology sector. He has also worked in Beijing and is fluent in Mandarin. 


China’s digital ambitions could have a significant influence on the global internet

Anyone following global trade in the past few years will know that China refers to its international expansion gently as a “new silk road”. The obvious historical allusion notwithstanding, there is very little actual silk in China’s grand plan to reclaim its place at the centre of the global economy. Nowhere is this more true than in the so-called digital silk road, the country’s effort to influence the development of the internet across the world.

The initiative, which was first announced by Lu Wei, then-head of the Cyberspace Administration of China, in July 2015 at a summit in Brussels, is, like the Belt and Road Initiative (BRI) more broadly, more a set of guiding principles packaged in bold rhetoric rather than a concrete plan. Rogier Creemers, a researcher at Leiden University in the Netherlands, identifies four aims of the programme: create export markets for Chinese technology, establish a bigger base for Chinese technological development through access to data, provide physical infrastructure for the BRI and boost goodwill towards China in beneficiary markets.

Regardless of the specifics beyond the name, the bottom line is that China is attempting to significantly enhance its global technological influence. This raises a number of questions: to what extent will China have an impact on the internet itself? What will the web—created in the West, with rules, norms and protocols still largely dominated by Western companies and democratic governments—look like if it takes on more Chinese characteristics? Will this have a bearing on who will gain control of the user data of millions of people—a commodity that, in some eyes, is ?

Manifest technology destiny

The answer to the first question is probably “a lot”. Start with the underlying hardware: China has been actively laying down infrastructure in countries in its sphere of influence, linking Beijing to Myanmar, Nepal and Kyrgyzstan via fibre-optic cables, while home-grown giant Huawei, which has close ties to the Chinese government, has announced that it would build an internet cable between Pakistan and Africa and is making aggressive moves to develop physical assets for 5G roll-out in countries from Turkey to Japan.

China’s success in its expansion to overseas markets can be attributed to a number of factors. China’s national champions have the skills, scale and capacity to handle country-sized digitisation projects. They also benefit from their government’s paving the way (both literally and figuratively) via the BRI. Mr Creemers also notes that the US, China’s main competitor in this space, has proven a less-than-reliable partner lately. “In many ways China is a lot easier to deal with and isn't referring to your country as a ‘shithole’,” he says.

At the consumer end, Chinese smartphone makers have taken aggressive steps to expand in emerging markets, recently edging out global leader Samsung in South-east Asia, while Huawei has unseated Apple for second-most shipments globally. Relatively low prices and proximity to technology supply chains, which facilitates mass manufacturing, play into China’s favour.

In terms of policy, China has been taking a more active role in drafting international standards around hardware specifications, partly as a means of facilitating digital silk road ambitions. It has also been exporting parts of its online censorship framework to developing countries, including Tanzania, Vietnam and Iran. “[China] is not just saying ‘we want to be leaders in the technology’, they’re saying ‘we also want to be leaders in shaping the governance around the technology’,” says Samm Sacks, a senior fellow in technology policy at the Washington, DC-based Center for Strategic and International Studies.

Canted platforms

Answering the second question, that of China’s influence on the global web, is more difficult. It is hard to imagine a Chinese company—or one from any other country—unseating US tech giants anytime soon in their dominance of many of the platforms and services that rest atop this hardware. Particularly in the key areas of search, social networking and productivity software, American companies hold a distinct advantage. Although Chinese behemoths like Tencent and Alibaba are buying stakes in tech start-ups around the world, their own core offerings are relatively unknown outside their home market. WeChat has 100m users outside China (compared with 980m total), only a tiny fraction of the combined 5.6bn users for all of Facebook’s messaging and social services—WhatsApp, Messenger, Instagram and Facebook itself. Facebook’s market share in Asia is 41%, despite being banned in China. Google is a veritable monopoly in the region—and most Chinese smartphones come packaged with its Android operating system, cementing its ubiquity. The level of integration these platforms have in their users’ digital lives gives them access to rich data, which they can use to offer personalised services—thereby making them yet more popular.

The data divide

This leads back to the third question, surrounding provenance of user data, which may be the hardest of all to answer. One of the ostensible aims of the digital silk road—access to data of users outside China’s borders—has alarmed some, who are worried that Chinese hardware will, in essence, be used as a vehicle for spying. Indeed, Huawei has been accused of using its broadband base stations as “back doors” to transmit data to China.

The picture is complicated by the fact that China’s own guidance around data gathering is , which is the most restrictive in the world. Part of this involves requiring that some Chinese data be stored within the country’s borders. Ms Sacks says that, in this regard, China appears to be working at cross-purposes with itself. On one hand, it is dispatching its national champions to link up far-flung countries and potentially gain access to troves of data. On the other, it is advocating for data localisation policies akin to those it is enacting domestically. Other countries, including Nigeria and Egypt, are indeed following China’s lead, passing or considering laws that mandate user data be stored domestically. “This is at odds with the idea of having Chinese private companies go out and be competitive outside of China's closed internet ecosystem,” says Ms Sacks. “We've seen some pushback from some of China’s internet companies around these provisions because the law is not favourable to having this sort of globally oriented digital economy.”

Regardless of the extent of China’s overseas data gathering, Western platform giants are not likely to throw up major roadblocks. Facebook has already been Huawei access to some user data. “The whole BRI is going to create huge income potential for these [Western] companies,” says Mr Creemers. “There is no way they will not play ball with the Chinese firms undergirding the digital silk road.”

These overlapping and often contradictory interests are leading to the emergence of a kind of hybrid model for the internet in much of the world: principles of governance and laws and regulations borrowed from China, including elements of censorship; hardware—both structural and consumer-focused—from China; and platforms and software from entrenched Western giants. What kind of internet policies will platform companies need to contend with going forward? How will China’s international tech champions manage the troves of data that will run through their pipes? That this model is only just starting to take shape means more questions are likely to emerge in future, with vast implications for governments, companies and internet users around the world.


Enjoy in-depth insights and expert analysis - subscribe to our Perspectives newsletter, delivered every week