CHINAMacroReporter

'Dominating the Digital Silk Road'

‘China’s Belt and Road Portal reports the Digital Silk Road has enabled six thousand Chinese internet companies and more than ten thousand Chinese technology products to enter foreign markets.’
by

Task Force Report on China’s Belt & Road

|

Council on Foreign Relations

March 31, 2021
'Dominating the Digital Silk Road'
BIG IDEA | ‘BRI enables Chinese technology companies to penetrate and dominate markets.’
‘China’s Belt and Road Portal reports the Digital Silk Road has enabled six thousand Chinese internet companies and more than ten thousand Chinese technology products to enter foreign markets.’

‘Announced in 2015, the Digital Silk Road is a more focused undertaking than BRI writ large.’

  • ‘A handful of China’s national champions—Huawei, ZTE, China Mobile, China Telecom, Alibaba, Tencent, Baidu, and JD, as well as a few others—are encouraged to build out digital infrastructure in BRI countries, with less overlap and a clearer division of labor.’

‘Tencent, Baidu, and JD, as well as a few others—are encouraged to build out digital infrastructure in BRI countries, with less overlap and a clearer division of labor.’

  • ‘China’s Ministry of Industry and Information Technology has provided clear direction to these companies, identifying six core areas for the Digital Silk Road: 5G technology, smart cities, utilization of the Beidou satellite system, communication infrastructure, network connectivity, and telecommunications services.’

‘Under the Digital Silk Road, indigenous Chinese ICT firms receive state backing that gives them three sets of advantages:’

  1. ‘First, companies such as Huawei, Hikvision, and ZTE gain preferential government treatment through policy support and major lines of credit through CDB, China EXIM, and state-owned commercial banks. This in turn allows them to sell their products 30 to 40 percent more cheaply than non-Chinese competitors.’
  2. ‘Second, Beijing also extends credit to specific Digital Silk Road projects and countries to allow them to make major purchases from Chinese companies. For example, China EXIM financed 85 percent of the China-Pakistan Fiber-Optic Project and loaned to Nigeria the full cost of a Huawei-built 5G network.’
  3. ‘Third, policy backing and pricing advantages allow Chinese companies to receive preferential terms when they negotiate deals with local governments.’

‘China’s Belt and Road Portal reports Digital Silk Road has enabled six thousand Chinese internet companies and more than ten thousand Chinese technology products to enter foreign markets.’

‘For a technology company such as Huawei, moving into a new market can be expensive—a problem alleviated by government subsidies that make Huawei’s products significantly cheaper than its competitors and Chinese financing to Huawei’s customers that enables them to purchase these already cheaper products at lower interest rates with more generous grace periods.’

  • ‘Once Huawei is in place, it is relatively cheaper for additional Chinese companies to follow it into that market or for Huawei to gain a foothold in adjacent markets.’

‘China often offers BRI countries complete technology packages, including cloud services, mobile payments, smart cities, and social media applications from a combination of Chinese companies.’

  • ‘Once these technology suites are embedded, switching to non-Chinese providers becomes far less likely and more costly for local operators, especially because telecommunications companies generally cannot mix and match components—using Huawei equipment alongside Ericsson or Nokia, for example.’

‘Moreover, if Huawei builds the entire 5G network for a given Digital Silk Road country and its neighbors, this raises the chances that it will be chosen to upgrade those systems when newer technologies become available.’

  • ‘Huawei has already finalized more 5G contracts than any other telecom company, half of which are for 5G networks in Europe (see figure 11. above).’
  • ‘In Africa, Huawei has built 70 percent of the fourth-generation (4G) networks on the continent and has signed the only formal agreement on 5G on the continent.’
  • ‘In all, Huawei has shipped seventy thousand 5G base stations globally.'

‘The export of Huawei telecom equipment along the Digital Silk Road has also enabled the company’s share of global telecom equipment to increase by 40 percent in the years since BRI was rolled out.’

‘The Digital Silk Road provides additional backing to Chinese companies to build foreign digital ecosystems.’

  • ‘Alibaba, the Chinese e-commerce giant, has come to dominate e-commerce in Malaysia, for example, and its affiliate Ant Financial has subsequently established cooperation agreements with Malaysian banks, leading to much stronger bilateral commercial and financial ties.’
  • ‘Malaysia is an outlier in the extent of its embrace of Chinese e-commerce, but the Chinese government has also begun a push to export data centers, including through ASEAN, which could make members depend more on China for data storage, analysis, and exploitation.’

‘Through the Digital Silk Road, China uses the initial sales of digital infrastructure to set accompanying standards.’

  • ‘The success of Chinese companies such as Huawei and ZTE in building 5G networks and setting standards for these networks in Africa and parts of Asia is making it difficult for Western companies to sell similar technologies in these regions.’
  • ‘The concern for non-Chinese firms is China’s ability to use initial sales, along with service and maintenance contracts—and any accompanying standards—to lock in market share for Chinese companies, particularly in those sectors where switching to a different provider is difficult and expensive.’

More

CHINAMacroReporter

February 7, 2021
' "Longer Telegram" | To Counter China’s Rise, the U.S. Should Focus on Xi'
A strategy that focuses more narrowly on Xi, rather than the CCP as a whole, presents a more achievable objective.'
keep reading
February 7, 2021
'The Sources of Soviet Conduct'
'The main element of any United States policy toward the Soviet Union must be that of a long-term, patient but firm and vigilant containment of Russian expansive tendencies.’
keep reading
February 7, 2021
'Remarks by President Biden on America's Place in the World'
“We’ll confront China’s economic abuses; counter its aggressive, coercive action; to push back on China’s attack on human rights, intellectual property, and global governance.”“But we are ready to work with Beijing when it’s in America’s interest to do so. We will compete from a position of strength by building back better at home, working with our allies and partners, renewing our role in international institutions, and reclaiming our credibility and moral authority, much of which has been lost.”“That’s why we’ve moved quickly to begin restoring American engagement internationally and earn back our leadership position, to catalyze global action on shared challenges.”
keep reading
February 18, 2021
'Like It Or Not, America Is Still A Superpower'
‘The twentieth century was littered with the carcasses of foreign leaders and governments that misjudged the United States, from Germany (twice) and Japan to the Soviet Union to Serbia to Iraq. Perhaps the Chinese, careful students of history that they are, will not make the mistake that others have made in misjudging the United States.’
keep reading
February 16, 2021
'Is China experiencing an advance of the state sector?'
‘The value-added produced by state-owned enterprises has usually been in the range of 25-30% of China’s GDP. And what’s really striking about those numbers is that they just haven’t changed very much over the past 25 years. The share of China’s economic output being produced by SOEs today, under Xi Jinping, is not significantly different than it was under Hu Jintao, or even in the later years of Jiang Zemin.’
keep reading
February 16, 2021
‘China Blocked Jack Ma’s Ant IPO After Investigation Revealed Likely Beneficiaries’
‘Behind layers of opaque investment vehicles that own stakes in Ant Financial are a coterie of well-connected Chinese power players, including some with links to political families that represent a potential challenge to President Xi and his inner circle. Those individuals, along with Mr. Ma and the company’s top managers, stood to pocket billions of dollars from a listing that would have valued the company at more than $300 billion.’
keep reading
February 14, 2021
How to Keep U.S.-Chinese Confrontation From Ending in Calamity
'The two countries need to consider something akin to the procedures and mechanisms that the United States and the Soviet Union put in place to govern their relations after the Cuban missile crisis—but in this case, without first going through the near-death experience of a barely avoided war.'
keep reading
February 14, 2021
The United States, China, and Taiwan: A Strategy to Prevent War
‘We believe that a crisis is building over Taiwan and that it is becoming the most dangerous flashpoint in the world for a possible war that involved the United States of America, China, and probably other major powers.'
keep reading
February 13, 2021
Why China Will Go Green - Really
‘To Communist Party leaders, greenery increasingly aligns with their economic and political interests. China, a populous country that is cruelly lacking in clean water and arable farmland, and which hates having to rely so heavily on imported energy, has a selfish interest in embracing what President Xi Jinping calls “ecological civilisation”.’
keep reading
February 11, 2021
'The Biden Team Wants to Transform the Economy. Really.'
‘Biden and his more activist advisers hope to modernize key industries and counter an economic threat from China, swiftly emerging as the world’s other superpower. “The package that they put together is the closest thing we’ve had to a broad industrial policy for generations, really,” says Scott Paul, the president of the Alliance for American Manufacturing.’
keep reading
February 10, 2021
‘What the ‘Hong Kong Narrative’ gets wrong'
‘For a significant cohort of the [“pro-democracy”] protesters, the more accurate label would be “anti-China activists.” The one thing that seems to unite them is not a love of democracy, but a hatred of China.'
keep reading
February 8, 2021
Why the Anglosphere sees eye to eye on China
‘Some of America’s European allies are very wary of what they fear will be a new cold war with China. By contrast, the US is getting more support from the UK, Australia and Canada.’
keep reading
February 7, 2021
' "Longer Telegram" | To Counter China’s Rise, the U.S. Should Focus on Xi'
A strategy that focuses more narrowly on Xi, rather than the CCP as a whole, presents a more achievable objective.'
keep reading
February 7, 2021
'The Sources of Soviet Conduct'
'The main element of any United States policy toward the Soviet Union must be that of a long-term, patient but firm and vigilant containment of Russian expansive tendencies.’
keep reading
February 7, 2021
'Remarks by President Biden on America's Place in the World'
“We’ll confront China’s economic abuses; counter its aggressive, coercive action; to push back on China’s attack on human rights, intellectual property, and global governance.”“But we are ready to work with Beijing when it’s in America’s interest to do so. We will compete from a position of strength by building back better at home, working with our allies and partners, renewing our role in international institutions, and reclaiming our credibility and moral authority, much of which has been lost.”“That’s why we’ve moved quickly to begin restoring American engagement internationally and earn back our leadership position, to catalyze global action on shared challenges.”
keep reading
February 7, 2021
'In Search of Today’s George Kennan'
‘Kennan provided a framework to break through the bitter divide between those who believed America should return to its prewar isolationism, and those who believed the USSR was itching for a dramatic showdown with the capitalist west.’
keep reading
February 7, 2021
' "Longer Telegram" Sets Off Fierce Global Debate'
'The fierce global debate set off this week by a thought-provoking paper - “TheLonger Telegram: Toward a New American China Strategy” – has underscored the urgency and difficulty of framing a durable and actionable U.S. approach to China as the country grows more authoritarian, more self-confident and more globally assertive.'
keep reading
February 7, 2021
The 'Longer Telegram' & Its Discontents
Why everyone wants to be George Kennan‘In 1947 X penned his history-changing “Sources of Soviet Conduct” in Foreign Affairs,’ wrote Edward Luce in the Financial Times in 2018.‘The piece, which crystallised America’s cold war containment strategy, was the making of George F Kennan’s life-long reputation as a master of geopolitics.’‘ As the architect of a doctrine that won the cold war.’
keep reading
February 7, 2021
'Brookings experts analyze President Biden’s first foreign policy speech: Focus China'
'To respond effectively, Biden argued, America will need to rebuild leverage, e.g., by pursuing domestic renewal, investing in alliances, reestablishing U.S. leadership on the world stage, and restoring American authority in advocating for universal values.'
keep reading
February 7, 2021
'Why the ‘Longer Telegram’ Won’t Solve the China Challenge'
‘Perhaps the most problematic aspect of the 'Longer Telegram's' emphasis on Xi—“All U.S. political and policy responses to China therefore should be focused through the principal lens of Xi himself”—is the author’s conclusion that Washington should be seeking to escape from, and even try to effect the removal of, Xi’s leadership because that could restore U.S.-China relations to a potentially constructive path: “its pre-2013 path—i.e., the pre-Xi strategic status quo.” ’
keep reading
February 4, 2021
Why Beijing Is Bringing Big Tech to Heel
‘Beijing’s recent antitrust efforts are motivated less by worries about the tyrannical nature of monopoly power than by the belief that China’s tech giants are insufficiently committed to promoting the goal advanced by the Chinese Communist Party (CCP) of transformative technological innovation—and thus may be undermining the effectiveness of Chinese industrial policy.’
keep reading
February 3, 2021
'Secretary of State Antony Blinken on U.S. Policy Toward China'
‘There’s no doubt that China poses the most significant challenge to us of any other country, but it’s a complicated one.’
keep reading
February 3, 2021
'Burma’s Coup and Biden’s Choice'
‘The top U.S. priority in Asia is limiting Beijing’s ability to control independent states like Burma, which is strategically situated in the Indo-Pacific. The U.S. response needs to take into account China’s regional designs.’
keep reading
February 3, 2021
'Myanmar, Burma and why the different names matter'
‘Unlike most of the world, the U.S. government still officially uses "Burma." '
keep reading
February 3, 2021
'Coup a further complication for tricky Myanmar-China ties'
‘Even if China played no role at all in ousting Suu Kyi, Beijing is likely to gain still greater sway over the country.’
keep reading
February 3, 2021
‘Beijing Won’t Let America “Compartmentalize” Climate Change'
‘‘You want China to take action on climate change?" asks Xi Jinping. "Let’s talk about what you’re going to give to get it.’’
keep reading
February 3, 2021
Burma: At the Center of the U.S.-China Competition
In today’s issue: 1. China Lays Out Its Position / 2. The U.S. Lays Out Its Position / 3. Burma: At the Center of the U.S.-China Competition / 4. Burma or Myanmar?
keep reading
February 3, 2021
'A Conversation with Politburo Member Yang Jiechi'
‘History and reality have shown time and again that these issues concern China's core interests, national dignity, as well as the sentiments of its 1.4 billion people. They constitute a red line that must not be crossed.’
keep reading
February 3, 2021
'National Security Advisor Jake Sullivan on U.S. Policy Toward China'
‘Being prepared to act as well to impose costs for what China is doing in Xinjiang, what it’s doing in Hong Kong, for the bellicosity of threats that it is projecting towards Taiwan.’
keep reading
February 3, 2021
'Coup Puts Myanmar at the Center of the U.S.-China Clash'
‘Chinese oil and gas pipelines snake across Myanmar from China’s landlocked Yunnan province to the Bay of Bengal—a route that Beijing wants to transform into a broader economic corridor with road and rail connections.’
keep reading
February 3, 2021
'Biden's whole-of-National Security Council China strategy'
'National security adviser Jake Sullivan is personally focused on China as a priority, building capacity across departments and agencies and running processes that break down old silos between foreign and domestic policy.'
keep reading
January 31, 2021
'Biden’s Nightmare May Be China'
‘The coming years represent the greatest risks since I began covering U.S.-China relations in the 1980s, partly because Xi is an overconfident, risk-taking bully who believes that the United States is in decline.’
keep reading
January 31, 2021
Opinion | Marco Rubio: 'China is exploiting U.S. capital markets and workers. Here's what Biden should do.'
‘China can finance its industrial ambitions with the deepest, most liquid capital markets in the world — our own.’
keep reading
January 31, 2021
The UK Stands Up, the U.S. Not So Much
“We have honored our profound ties of history and friendship with the people of Hong Kong, and we have stood up for freedom and autonomy—values both the U.K. and Hong Kong hold dear.” British Prime Minister Boris Johnson
keep reading
January 31, 2021
'U.S.-China Capital Flows Vastly Underestimated'
‘And yet, debates around US-China passive securities investment suffer from shortcomings similar to those inherent in the early debates about US-China bilateral FDI and VC: official data do not provide a clear picture for policymakers to understand the scope and patterns of two-way investment flows and stocks.’
keep reading
January 31, 2021
'Why U.S. Securities Investment in China is Vastly Underestimated'
‘The conduits of US securities investment in China that are obscured or ignored in the US Treasury International Capital (TIC) dataset constitute a majority of all holdings, so these figures vastly underestimate the true scope at the end of 2020.’
keep reading

Heading

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Suspendisse varius enim in eros elementum tristique. Duis cursus, mi quis viverra ornare, eros dolor interdum nulla, ut commodo diam libero vitae erat. Aenean faucibus nibh et justo cursus id rutrum lorem imperdiet. Nunc ut sem vitae risus tristique posuere.