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In 2015, China launched the Belt and Road Initiative (BRI), its most extensive and ambitious external engagement initiative. The BRI builds on China’s years-long international infrastructure diplomacy and signals the ambitions to consolidate its overseas investments, commercial loans, and grants-in-aid to various countries. The project has three broad components: the Silk Road Economic Belt, a transcontinental passage linking China with Southeast Asia, South Asia, Central Asia, Russia, and Europe; the 21st-Century Maritime Silk Road, a sea route linking China’s coastal regions with Southeast and South Asia, the South Pacific, West Asia, and Eastern Africa; and the Digital Silk Road (DSR), information and communications technology (ICT) exchanges, and digital cooperation with emerging markets and developing economies.

Several private actors and state-owned enterprises in China, supported by state banks, have offered inexpensive technology contracts and rapidly built digital infrastructure projects across the Indo-Pacific, Africa, Europe, and other parts of the world. Consequently, the DSR initiative has picked up pace since 2017, when it was officially launched as a separate component of the BRI, and several countries that are aiming for digital transformation have joined these tech projects. Official figures from the Chinese government suggest that the country has signed bilateral agreements for digital cooperation and infrastructural development with approximately 40 countries, or about one-fourth of the total countries that signed the BRI. Of these 40 countries, 24 are in the Indo-Pacific region, which includes 60 percent of the world’s developing countries.

The DSR’s growing footprint, accompanied by extensive investments in the physical connectivity and infrastructure domains, offers China the opportunity to shape the tech policy of several countries. By consolidating its hold in the digital domain of the Indo-Pacific, China aims to project itself as an alternative to the West. This brief examines China’s operationalisation of the DSR in the Indo-Pacific region by assessing its two major components: undersea cables and hi-tech closed-circuit television (CCTV) cameras. While China’s dominance in the 5G telecom market has been widely analysed, its influence in the domains of undersea cables and CCTV cameras has attracted less attention. This brief assesses these components in the context of the DSR’s role in fulfilling China’s strategic objectives.

Understanding China’s Strategic Objectives

The DSR was first mentioned in the National Development and Reform Commission’s 2015 'Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road’ document, which stated that China should “build bilateral cross-border optical cable networks”, “plan transcontinental submarine optical cable projects”, and improve “satellite information passageways” to create the “Information Silk Road”. The document envisaged the DSR as part of a comprehensive infrastructure push in BRI countries the where China would develop housing projects, economic corridors, energy exploration programmes, and renewable energy generation projects, and establish entrepreneurial and investment cooperation mechanisms. Some subsequent Chinese government reports also refer to the initiative as the 'Belt and Road Digital Economy International Cooperation Initiative’, aimed at leveraging digital opportunities and enhancing connectivity along the ancient Silk Route.

A large part of the DSR’s expansion can be attributed to China’s bilateral digital cooperation agreements with various countries. In the Indo-Pacific, China has engaged as many as 24 countries on digital cooperation. Although most of these engagements are memoranda of understanding (MoUs) rather than tangible collaborations, they showcase the expanse of China’s digital cooperation with other countries, which spans e-commerce, digital infrastructure projects, capacity building, and investment in the digital economy. Between 2017 and 2022, Chinese companies collectively invested nearly US$23 billion in the 24 countries. Under these investments, China has built ICT infrastructure such as surveillance networks, laid undersea cable networks, and facilitated 4G and 5G network expansion to increase connectivity within the Indo-Pacific region.

The rapidly digitising economies of the Indo-Pacific offer a significant potential to expand the DSR’s footprint. Accordingly, China has encouraged its tech and communication companies to deepen cooperation with and expand their market share in countries in the Indo-Pacific. State-owned enterprises like China Telecom, China Mobile, Hikvision, Unicom, and Dahua (which is partially state-owned) and private companies like Huawei, Baidu, Hengtong, Alibaba, and Tencent have consolidated their presence in the emerging markets and developing economies of the Indo-Pacific.

In the last decade, Chinese tech companies have significantly expanded their footprint in the Indo-Pacific. For instance, Huawei and Alibaba dominate markets in Southeast and West Asia in the telecom and digital payments sectors, respectively. Alipay, an online payments service, has nearly 1.3 billion users worldwide, and Huawei has emerged as the primary vendor for major technology projects in the developing world, especially 5G networks. Since these companies constitute the technological capacity in these countries, they also receive servicing and operational contracts, which further consolidates their hold in the region. The DSR has further facilitated Chinese tech companies to capture markets in the Indo-Pacific.

China’s investment in ICT development in the Indo-Pacific and the market capture by Chinese companies reflect Beijing’s latent strategic aims. China has facilitated the expansion of its tech corporations through the DSR and used the overseas revenues of these companies to build domestic technological capacity. Strong technological capacity is key for global power projection, especially since Beijing’s tech rivalry with Washington is now at a peak.

Notably, China’s tech capacity has strengthened since it joined the World Trade Organization in 2001 and began engagements with Western tech companies. After China opened up its economy in 1978, several Western companies such as Nortel, Amazon, and Cisco established offshore manufacturing firms in Chinese Special Economic Zones. Today, through the DSR, Chinese tech companies are able to challenge the West’s tech dominance in the developing world.

In addition, through DSR, China is also aiming to position itself as the central node in the contemporary tech ecosystem through developing connectivity in the Indo-Pacific and other regions, which would help China access large data pools and develop a new standards ecosystem. China is also utilising the DSR to promote digital commerce through digital free trade zones. These zones have increased international e-commerce by reducing cross-border trade barriers and establishing regional logistics centres. Therefore, the DSR has helped Beijing leverage its emerging status quo in a globalising world and recognise the significance of economic interdependence.

Consolidating its digital hold in the Indo-Pacific is a priority for China. The Indo-Pacific is a single strategic and geopolitical construct linking the contiguous waters of the Western Pacific and the Indian Ocean. The region begins from the eastern coast of Africa and includes the Indian Ocean countries, Southeast Asia, Japan and its adjoining countries, and the Americas. The region houses 65 percent of the world’s population, produces 63 percent of the world’s gross domestic product, and carries out 50 percent of the global trade; therefore, it has emerged as a hub of economic growth and offers a significant market for Chinese companies, especially tech corporations. Beijing is seeking to leverage the DSR to capitalise on the economic and technological dynamics of the region. For instance, ZTE, Huawei, and China Unicom have been aggressively penetrating new markets in the region by offering 5G technology at cheaper rates than Western competitors and buying equity in local telecom companies to further telecom hardware exports. This, combined with the push from the Chinese government, has enabled Huawei and ZTE to corner 29 and 11 percent of the total global 5G revenues, respectively.

A robust national ICT infrastructure requires physical infrastructural capacity, which encompasses undersea cables, mobile towers and stations, server stations, surveillance technology, fibre optics, and antennas.

The development of ICT infrastructure is three-layered, namely, data connectivity, which comprises cables and antennas to transmit data and frequencies; the route and change layer, which sends data from one point to another through the shortest data point; and the edge layer, which is the access layer where switches connect and deliver data to devices like computers and servers.

Investing in these capacities is expensive, especially for countries that are just beginning to undertake the process of digitalisation. Through the DSR, Chinese corporations are financing and investing in developing these physical capacities in the Indo-Pacific countries. Beijing’s involvement has included exporting 5G technology, laying undersea cables and optic fibre, enabling the provision of satellite dishes, as well as providing cutting-edge technologies such as cloud computing, artificial intelligence (AI), and facial recognition software. Two of the major activities of the DSR include laying undersea cables and installing CCTV cameras.

China’s interest in undersea cables precedes the DSR. As of 2020, HMN Technologies (formerly Huawei Marine Networks) has executed 16 undersea cable projects, amounting to US$1.6 billion, across 27 countries in the Indo-Pacific (see Table 3). In less than a decade (2012–20), HMN has laid down almost 70,000 kilometres of undersea cables and completed 100 contracts. These projects have received considerable Chinese state patronage, which has enabled the company to expand its footprint; from holding a 7-percent share of global undersea cables projects in 2012, the company increased its share to 20 percent in 2019. In 2020, Hengtong, China’s largest power and optical fibre cable manufacturer, acquired an 81-percent stake in HMN Technologies.

HMN Technologies is rapidly advancing its capabilities and aims to become self-sufficient in installing and repairing cables. One of HMN Technologies’ major recent projects is the ambitious PEACE undersea cable, which starts in Pakistan and ends in France, thus connecting Europe, Africa, and Asia. In Pakistan, the PEACE cable is also linked with the China–Pakistan Economic Corridor, which aims to increase connectivity for the port cities of Gwadar and Karachi. Connectivity between the two nations is further strengthened by a fibre-optic line that connects the port cities to Rawalpindi, which is the headquarters of the Pakistani military. A fibre-optic line already runs through the city to China’s Xinjiang Uyghur Autonomous Region. Together, these linkages connect Pakistan's ports to the nation’s fibre-optic system that runs through Rawalpindi and has established links with China for strategic cooperation.

Similarly, HMN Technologies has been instrumental in connecting the Indonesian archipelago. The corporation has also extended its services in the larger Southeast Asian region. In its flagship overseas conference, Huawei Connect 2021, the company promised deeper digital connectivity in Southeast Asia to supplement the region’s aim to become a destination for high-end manufacturing through building infrastructure and capacity to deploy 5G industrial applications.

By 2025, China intends to capture 60 percent of the world’s fibre-optic communications market. China’s telecom companies are joining undersea cable consortiums that award contracts to lay down cables. The dominance of Chinese companies threatens the commercial prospects of Western companies like SubCom and Alcatel and raises security concerns; for instance, the US has flagged China’s potential eavesdropping and manipulation of the data traffic from these cables.

Chinese companies have also strengthened their presence in the global CCTV market. Hikvision and Dahua, the two largest CCTV companies in the world, are Chinese, and have installed over 6.3 million cameras outside the country, of which 25 percent are in the US and Vietnam. Many of these CCTV cameras have been installed by national authorities as part of smart-city solutions offered by China under the BRI.

However, this deployment of CCTV cameras has also sparked cybersecurity and surveillance fears, and ethical concerns. For instance, Dahua’s cameras reportedly have a skin-colour analytics feature as part of a smart security solution. These cameras have become a key element of extremely accurate AI-enabled facial recognition software deployed by China. The US and Australia have linked Dahua and Hikvision to Chinese authorities’ surveillance in the restive Xinjiang province. Most re-education and detention camps in Xinjiang contain equipment from Hikvision; in its 2020 half-yearly report, Hikvision noted that it is financing surveillance equipment worth US$145 million for the Xinjiang police.

Remote-hijacking vulnerabilities have also been identified in the Hikvision cameras, which may enable unauthorised access. Additionally, there are worries about cross-border data transmission to Chinese and China-based servers. For instance, the UK’s Biometrics and Surveillance Camera Commissioner’s 2021-22 annual report noted that system upgrades can potentially allow these cameras to record video or audio and download this data to Chinese servers. Amid such concerns, in 2022, the US government banned Dahua and Hikvision sales on American soil and determined to reassess the surveillance tech used at government facilities. Australia has also begun removing Hikvision and Dahua cameras after a government audit found them in use in government buildings.

China’s practices have led to several other countries adopting similar surveillance measures domestically. According to the Carnegie Endowment’s AI Global Surveillance Index, several countries in Southeast Asia, including Myanmar and Laos, have deployed CCTV cameras and facial-recognition technology to fortify their security surveillance network. Indeed, surveillance networks and other tech capacities are often part of ‘smart cities’.

Approximately 214,000 Dahua and Hikvision CCTV cameras are installed in various Indian cities, including Mumbai (32,563), Chennai (9795), Bengaluru (8616), and Delhi (7006). In March 2021, the Indian government noted that around one million CCTVs from Chinese companies are installed in government institutions. The government also admitted that there are vulnerabilities associated with video data captured through CCTV cameras being transferred to servers located abroad and stated that the government is taking the necessary steps to mitigate surveillance concerns. In April 2023, the Confederation of All India Traders wrote to the Ministry of Electronics and Information Technology requesting a ban on Chinese cameras and formulating plans for ‘Make in India’ devices.

In the Indo-Pacific, China is emerging as a fierce competitor to the US-led technological order by successfully using the DSR and exporting tech to reorder the regional digital ecosystem. Prior to China’s emergence as a major global tech supplier, especially before its tech exports came under the aegis of the DSR, the US and its allies dominated global tech markets. The US’s share of global high technology exports has declined from 21 percent (US$357.4 billion) in 2007 to 9.4 percent (US$264.8 billion) in 2021. Meanwhile, China’s share of global tech exports rose from 20.3 percent (US$345 billion) in 2007 to 33.4 percent (US$942 billion) in 2021.

The proliferation of Chinese tech has caused considerable consternation among likeminded democracies of the Indo-Pacific and the West, which fear losing lucrative tech contracts in the region to Chinese corporations. Democratic powers in the Indo-Pacific region fear that Chinese tech exports are accompanied by Chinese models of digital authoritarianism and social norms that use ICT to surveil, repress, and manipulate domestic and foreign populations. Authoritarian regimes can utilise technologies and software procured from China to replicate the Chinese Communist Party’s surveillance and bring critical financial and personal data of its citizens under the scrutiny of the state itself, or that of Beijing. For instance, dominating the undersea cables market gives China potentially unfettered access to the vast amounts of varied data transmitted through these cables. These concerns are exacerbated by China’s National Intelligence Law, 2017, which mandates Chinese organisations and citizens to “support, assist and cooperate with the state intelligence work”. This includes handing over or giving access to user data or other information pertaining to national security, or any other dataset that is trafficked by Chinese tech companies. This has prompted speculations around the presence of digital ‘backdoors’, at Beijing’s behest, in digital infrastructure provided by Chinese companies. For example, the PEACE cable raised concerns regarding user privacy and data protection in the US and Australia.

The DSR is part of China’s broader ‘techno-nationalism’ that focuses on technological excellence aimed at geopolitically displacing the US and the West’s tech dominance. The flagship ‘Made in China 2025’ initiative has sought to solidify China’s position in emerging technologies and advance the manufacturing capacities of the country. Simultaneously, China has focused on crafting new standards for emerging technologies; in 2021, it unveiled a long-term strategy which aims to build a standardisation management system with Chinese characteristics by 2035.

Developing new tech standards is critical for China to provide the international influence  seeks and to yield revenues. For instance, a patent fee paid by telecom operators and manufacturers in other countries directly benefits Chinese firms, which receive royalties or licence fees for standard essential patents that require foreign firms to comply with Chinese technical standards. For instance, Huawei holds more than 110,000 patents and has made the highest number of applications to protect its inventions internationally under the Patent Cooperation Treaty. As a result, Huawei alone brought in US$3 billion worth of licensing royalties between 2019 and 2021.

Another significant element of the standardisation is the new internet protocol (IP) proposed by China at the Internet World Conference in 2021, which seeks to replace the US-invented Transmission Control Protocol/Internet Protocol. Although the newly proposed IP standard is faster than the existing protocol, it has built-in surveillance and a “shut-up command”, which can cut data flow to and from any IP address at any time.

Today, there is greater awareness of the security risks Chinese tech poses. However, smaller Indo-Pacific economies find it difficult to avoid Chinese tech due to commercial considerations and the benefits to the host state. This friction between cost and security risks is bound to amplify. While there are obvious commercial costs associated with offering advanced tech at cheap rates, China will nevertheless push the DSR to expand its footprint, thus enabling Chinese telecom and tech companies to thrive.

This proliferation of Chinese technology and its potential geostrategic and geoeconomic implications has prompted the US to act by strengthening domestic regulations and mobilising allies to crack down on Chinese tech corporations. The US government and the Congress pushback on DSR include measures such as banning Huawei, restricting the sales of Chinese CCTV cameras, and the passing of the CHIPS Act 2023. To further counter China, the US has deepened cooperation with traditional partners such as the G7 nations and the European Union and sought new partners such as India and Australia. Additionally, it has engaged in multiple initiatives such as the Quad, the Partnership for Global Infrastructure and Investment, and the US–India initiative on Critical and Emerging Technology to pursue tech innovation. The course of these initiatives remains to be seen; however, it is clear that the US is relying on the power of its formal treaty allies and security partners to resist China’s push for the DSR.

Conclusion

Contemporary China–US power contestation is marked by technological, economic, and geopolitical tussles. Washington and Beijing are vying for influence and strategic advantage in the Indo-Pacific region, where several economies require external assistance to augment their technological capabilities and other developmental priorities, such as infrastructural overhauls and resource exploration capabilities. These requirements have led to the region’s intensifying interest in the DSR, which offers advanced tech at cost-effective rates and swift project delivery. Amid concerns and bans in the West, Beijing has shifted its focus to emerging economies, where financial incentives are more enticing and the reception to Chinese tech is better than that from the West.

Although the COVID-19 pandemic may have curbed the enthusiasm of host countries regarding BRI investments, the DSR is persevering in the digital sphere. The initiative has enabled Beijing to establish a tech empire that challenges the West’s dominance. While American social media platforms like Meta and X have a hold on internet users, Western tech companies have been unable to replicate this dominance in ICT infrastructure.

The DSR has the potential to enhance digital connectivity in developing economies in the Indo-Pacific. However, it also provides Beijing with a tool to leverage to meet its geopolitical objectives, specifically through the surveillance and exploitation of in-built backdoors. Therefore, the weaponisation of tech through DSR can help China strengthen its hold in the digital domain and advance its authoritarian vision for tech expansion.

By Sameer Patiland Prithvi Gupta on January 3 2023 for the Ovserver Research Foundation.

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