China’s growing technological expertise along its digital silk road is expected to set benchmarks for the rest of the world to follow, according to analysts. President of China’s ambitious Belt and Road Initiative (BRI) started down the digital silk road long before the rest of the world began talking about connected smart cities and technology-driven solutions.
As China continues to expand its digital footprint in sectors as diverse as cloud computing, 5G, surveillance technology and virtual currency, observers see movement in some areas toward Chinese technological dominance.
China is already leading the world in Artificial Intelligence (AI), blockchain, 5G, and quantum technology publications and patents. Data fuels AI development and, thanks to its sprawling surveillance apparatus, China has access to immense amounts of it, so China seems well-positioned to emerge as a leader in this field.
China has already launched the biggest blockchain ecosystem in the world, connected to over 100 city nodes, and was the first country to launch widespread pilots of a digital fiat currency – the Digital Currency Electronic Payment (DCEP) system. Analysts agree that China has achieved enormous breakthroughs in some future technologies. Advancements in technologies allow China to more efficiently promote the progress of BRI, increase the bonding between China and BRI countries, and push BRI’s hard projects.
How technology will be incorporated into BRI projects will depend very much on the nature of the projects. This will differ among regions and countries.
– Research Associate, Lee Kuan Yew School of Public Policy, National University of Singapore
China’s world-leading fibre optic industry, which is already assisting BRI countries in transforming from traditional to renewable energy supplies. Many countries aligned with BRI are rich in solar energy resources, but “lack the technologies and resources to construct renewable energy infrastructure. Through BRI, China can export advanced renewable energy technologies to BRI countries and Chinese fibre optic enterprises can enjoy local preferential policies, including tax incentives, preferential treatment for equipment imports.
In some infrastructure areas, such as high-speed railway, 5G networks, and ultra-high voltage power grids, China’s standards have become the international standards as everyone else plays catch-up. Therefore, through collaborating with Chinese enterprises, BRI partner countries can adopt the technologies that accord with the most advanced standards in their infrastructure projects.
China’s technological prowess gives it an edge to push BRI’s hard projects, such as renewable energy, transportation, infrastructure, power, and healthcare since in today’s technology-driven world, the digital realm is intimately intertwined with hard infrastructure.
Railways, ports, and electricity grids, for instance, would not be able to operate effectively today without software, sensors, and cybersecurity. China also provides a useful reference for BRI countries with its digital transformation and industrial digitalisation models. Most BRI countries are developing countries and have limited experience in dealing with digital technology but can benefit from China’s digitalisation experiences.
Given that the BRI is primarily a financing/investment mechanism, exporting technology adds a different dimension to the entire BRI assistance package. Most BRI projects have already been dependent on using Chinese equipment and labour, so any kind of tech advancement might just mean higher quality or more efficient projects.
Anything digital will tend to also require a larger investment amount, and“the financial capacity of BRI recipient markets will come into question here as well, especially if these markets are prioritising developing adequate infrastructure to meet their domestic needs first. The best way for BRI partner countries to benefit from China’s technological prowess is to partner with Chinese operators.
While the West has focused too much on profits and not enough on cash flow business and service lines, China is developing technologies to hook their services into supply chains to generate cash flow streams. This business model is relatively more sustainable than the profit-oriented ones.
