DIGITAL SILK ROAD OF CHINA: CHALLENGES IN IMPLEMENTATION

Anastasia O.Barannikova

Admiral Nevelskoy Maritime State University, Vladivostok

Abstract: In recent years, China has been actively digitalizing all areas of its economy, including the transport and logistics sector. The current plans and strategies of the Chinese government provide for the introduction of information technology into large infrastructure and transport projects, both national and international. Among international projects, a special place is occupied by the Belt and Road initiative, and in particular, its component – the Digital Silk Road, which involves the creation of digital infrastructure, telecommunications, smart cities and 5G communications along the BRI routes. The introduction of new technologies will optimize routes and logistics, increase the safety of cargo transportation, and will improve the infrastructure, communications and transport systems of the participating countries. But despite the positive aspects, the implementation of DSR also carries certain risks for the participating countries, which will be discussed in this article.

Keywords: Digital Silk Road, One Belt – One Road, China, digital sovereignty, digital inequality

In recent years, China has intensified its efforts to become a powerful technology superpower. The rise of the digital economy is seen by the Chinese government as a key factor in the country’s future development. Plans for digitalization as a catalyst for socio-economic development are reflected in a number of documents, for example, the Made in China 2025 strategy, the Internet + concept and the Socio- economic Development Plan for the 14th Five-Year Plan (2021-2025), which is being implemented in country at the moment. The slogan of the Chinese government “Accelerate digital development and build a digital China” implies the digitalization of all spheres of the country’s life – economy and industry, agriculture, medicine, transport, as well as building a digital society, digital government, creating smart cities and digital villages, improving cybersecurity etc. A successful example of digitalization of the economy is the digital yuan (e-CNY). Thanks to the introduction of a digital national currency, China has managed to create a sovereign ecosystem of retail payments, which is fully controlled by the country’s government and protected from sanctions risks.

Naturally, digitalization has also affected the market of transport and logistics services, which is of particular importance for China, as the largest exporter and participant in global supply chains. The volume of the Chinese transport and logistics services market in 2022 was estimated at 440 billion US dollars (third place after the USA and the EU) [1]. Trends such as the development of e-commerce in the country and the growth of online sales on the one hand and the expansion of global trade relations on the other require the diversification of logistics solutions. In order to optimize and automate processes and reduce costs in logistics, digital technologies and “smart” logistics supply chains are being actively introduced, and “smart” ports are being actively built. These highly automated ports include the Ningbo Zhoushan seaport using cloud technology and 5G, the Tianjin smart container terminal, the ports of Mawan, Guangzhou, Qingdao, etc. The use of IT allows optimizing the number of personnel and operators, and reducing carbon emissions, thus simultaneously solving such acute problems for China, such as environmental, demographic and the problem of rising labor costs.

The current plans and strategies of the Chinese government provide for the introduction of information technologies in transport and logistics not only within the country, but also in large infrastructure and transport projects on an international scale. Among such projects, the “One Belt, One Road” initiative (hereinafter referred to BRI) deserves special attention, since it serves as one of the tools for promoting China’s global leadership. This megaproject involves the unification and development of land and sea trade routes connecting China with the countries of Southeast Asia, Africa, the Middle East and Europe, the construction of transport infrastructure, the elimination of trade and customs barriers, etc. As of January 2023, 151 countries and 32 international organizations signed cooperation documents with China on the project. Over the ten years of the initiative’s implementation, China’s trade turnover with countries along the route increased from US$1.04 trillion to US$2.07 trillion [9].

Over the course of several years, the initiative has evolved and been supplemented by such branches as the Polar and Green Silk Roads, the Health Silk Road and the Digital Silk Road (DSR), which will be discussed in this article.

The project to create a DSS was approved by the Chinese government in 2017, when Chinese President Xi Jinping, during the Belt and Road Forum for International Cooperation, noted that the initiative should become the “road of innovation” and the “Digital Silk Road of the 21st century” [5]. The DSR project involves the development of e-commerce, the Internet, big data technologies, satellite navigation, cloud computing and artificial intelligence along the BRI routes. The project provides for the creation of digital infrastructure from telecommunications and smart cities in Asia and Africa to 5G communication projects in Europe. At the moment, China has concluded a cooperation agreement with 16 countries on the creation of the DSR, and agreements have also been reached with 7 countries on cooperation in the digital economy [3].

As a rule, when considering aspects of the implementation of a DSR project, emphasis is placed on its positive aspects. Indeed, the introduction of IT along the BRI routes will make it possible to forecast and control processes, optimize routes and logistics, improve the safety of freight transportation, etc. In addition to the obvious benefits for China itself (the prospects for Chinese companies entering new markets), the project promises such bonuses to participating countries as development of infrastructure, communications, and transport.

At the same time there is a number of problems and obstacles, both at the stage of project introduction and during its further implementation.

Digital inequality

Just as the promotion of the BRI Initiative is impossible without the active participation of countries located along the Silk Road, the implementation of the Digital Silk Road is impossible without the involvement of the digital economies and technologies of the participating countries. However, the problem of the digital divide and inequality of access to digital technologies is already emerging. For example, at the beginning of 2023, the online population of China reached over 1 billion people, while that of Russia – only over 124 thousand people [7]. Naturally, this gap is due to the difference in the total population numbers of the two countries, but it is this difference that will determine the pace of development of the Internet of Things (IoT) market. As a result, China’s IoT market revenue is expected to reach US$184 billion by 2030, accounting for roughly a third of the total global market. In Russia and the countries of Central Asia, the same income will reach only 12.2 billion dollars, and in African countries – 6.6 billion [13]. At the same time, the level of digital infrastructure, security, and providing digital services to the population in Russia is at least comparable to that of China. As for other EAEU countries, the gap is much bigger. Almost all countries have weak competitiveness according to such criteria as the development of the digital economy, international digital trade, the introduction of digital innovations and a lower level of competitiveness in the field of digital infrastructure than China and Russia [12]. Such uneven digital development complicates China’s digital integration even with the EAEU countries. As for other countries participating in the DSR, for example, African countries have even less developed technologies and difficult conditions for building infrastructure and introducing innovations.

Risks to digital sovereignty

The technological lag of the DSR participating countries from China poses serious challenges and threats to their digital sovereignty. At the moment, Chinese technology giants – Huawei, China Mobile and China Telecom, ZTE, BeiDou, Dahua, Alibaba – are engaged in the digitalization of states connected to the DSR and the implementation of regional projects. During this implementation Chinese equipment is used. This not only makes participating countries dependent on manufacturers and vendors of Chinese products, but also creates difficulties in controlling data flows, which, in fact, is carried out by China. In this regard, fears are already arising in some Central Asian countries that China may abuse this control and use DSR related projects for political purposes. For example, Chinese companies may engage in unauthorized collection of data on citizens of Central Asian states in order to monitor the situation in the border Xinjiang Uygur Autonomous Region [11]. The rapid spread of Chinese digital technologies in Africa – which include telecommunications network cables, surveillance systems, cloud computing data centers, manufacturing facilities, research laboratories and educational programs – also raises concerns that China could exploit countries’ dependence on their technologies, investments and infrastructure up to the influence on political circles of these countries [15]. As for Russian-Chinese cooperation in this area, the dominance of Chinese technologies and infrastructure can lead to unequal

competition with Russian manufacturers, hampering their development, and on a political scale – to serious contradictions in views on the digitalization process and the issue of “control” of the Internet [8].

A common problem for all countries cooperating with China on the DSR project is that they are already hopelessly behind in the technological race. This race began several years ago and its leaders have already been identified – the USA and China. The rest of the countries are forced to content themselves with the role of a “cyber colony” or a platform for hosting big powers computing facilities. The need for China’s computing power will grow as ambitious plans to build a “Digital China” are implemented. So far, China is limiting itself to the construction of data centers abroad to implement cooperation projects with specific countries. For example, in 2021, Tencent Holdings launched the first Internet data center in Indonesia [16]. In 2024, a GDS Holdings data center will be launched in Malaysia [6]. The construction of similar data centers may also be required in the countries participating in the DSR projects. At the same time, the option should not be ruled out when China will try to reduce the negative impact of data centers on its own environment and energy consumption by transferring computing power to other countries, with all the ensuing problems.

(End of introductory fragment)