The Digital Silk Road: Introduction

David Gordon

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The development of the Digital Silk Road (DSR) will have significant consequences for China’s relations with much of the world and for the country’s own technological growth. Yet the nature and implications of the DSR are often misunderstood. This Adelphi book gathers leading experts on China, geo-economics and digital technology to evaluate the DSR’s impacts so far and the possible consequences of its future evolution.

China’s rise is no longer a question. The People’s Republic (PRC) today is an economic powerhouse, a growing high-technology dynamo and increasingly a critic of the current international system. President Xi Jinping’s centralised rule has marked the end of former president Deng Xiaoping’s era of China’s ‘hiding and biding’. If the second half of the twentieth century was defined by competition between the United States and the Soviet Union, competition between the US and China will define at least the first half of the twenty-first.

Deng’s ‘24-character strategy’ called for China to ‘lěngjìng guānchá, wěnzhù zhènjiǎo, chénzhuó yìngduì, tāoguāng yǎnghuì’, or ‘observe and analyse calmly, strengthen your own position, undertake change with confidence, conceal your true potential, contribute your part, never become the leader’.1 Deng’s strategy provided the strategic underpinnings for China’s increasingly successful global engagement over the quarter-century following 1989. In the wake of the global financial crisis of 2008, Beijing’s ambitious domestic economic-stimulus programme enabled it to lead the global recovery from the Great Recession. As the inconclusive outcomes of the wars in Iraq and Afghanistan damaged America’s image, China’s status rose.

It was in this context that, shortly after coming to power in 2012, Xi chose the Belt and Road Initiative (BRI) as a way to transcend the self-imposed limitations of the 24-character strategy to a much greater extent than his predecessor, Hu Jintao, had done. Launched in 2013, the BRI embodied China’s strategy of shaping globalisation through an intensification of its external infrastructure-development efforts. While Beijing has promoted the multibillion-dollar initiative, which focuses on traditional connectivity infrastructure such as roads, railways and ports, as a socio-economic endeavour for the developing and developed world alike, the promise that it would create ‘win–win’ opportunities has been greeted with scepticism in some quarters.2

Sparked in part by concerns about China’s growing global investments, political weight and military modernisation, Western liberal societies have begun to question how peaceful China’s rise actually is. The 2020 ‘Strategic Approach to the People’s Republic of China’ issued by the Trump administration depicted the rise of a strategic competitor.3 The administration of President Joe Biden has not strayed far from this competition-driven perception of China, although it has worked more closely with allies and like-minded partners in developing a strategy to counter some of the challenges that China’s rise poses to the liberal order. The European Union’s ‘EU–China Strategic Outlook’ in 2019, for example, referred to China as a partner, but for the first time also as a ‘systemic rival’, and transatlantic dialogues between the EU and US on China have been proposed by the EU.4

The BRI and other elements of Xi’s nationalistic agenda (see Damien Ma’s chapter in this volume) have for some observers cemented the view that China’s global engagements have little to do with creating a ‘community of common destiny’ or tackling global problems such as international terrorism or global warming. The ‘Chinese Dream’, the slogan for the rise in military, economic and cultural power China seeks to achieve to mark the centenary of the People’s Republic in 2049, is, after all, the embodiment of what its constitution calls ‘the great rejuvenation of the Chinese Nation’ and the return of the country to global centre stage as a great power.5 China intends to have rebounded from its suffering at the hands of colonial powers in the nineteenth and twentieth centuries, and to have built a ‘moderately prosperous society’ through ‘socialism with Chinese characteristics’.6 Governments in the liberal West, particularly that of the US, believe that Xi’s global initiatives have more to do with overturning at least the last phrase in Deng’s 24-character strategy – that China should not become a global leader – despite his statements that China will ‘never seek global hegemony’.7

Recently, concerns about China’s ambitions for global leadership have focused on what may be seen as a particular strand of the BRI, or a spin-off from it: the Digital Silk Road (DSR). Formally launched in 2015, the DSR initially referred to the inclusion of advanced technology in the BRI (see Robert Koepp’s chapter in this volume). Its name was a reference to the ancient network of trade routes that connected Europe and East Asia across Central Asia until the sixteenth century. While cyber was initially mentioned in BRI discussions only in the context of fighting cyber crime, by 2017 the DSR had emerged as a centrepiece of the government’s BRI strategy and in 2019 it was promoted further at the second Belt and Road Forum (BRF), where it was referred to as an initiative in its own right. By 2020 the DSR had become a focal point of China’s foreign policy, and Xi has continued to promote the idea of cooperation on digital connectivity, for example with members of the Association of Southeast Asian Nations (ASEAN).

But the DSR has received little attention compared to the BRI, and it has not been examined as broadly or as deeply as its parent initiative. It remains poorly understood, both as a government initiative and a commercial endeavour. It is difficult even to define the parameters of the DSR; the little official documentation that exists is ambiguous and sometimes contradictory. Some government documents define the DSR as those digital technologies that increase connectivity or help build digital economies, and point mainly to investments in telecommunications-network infrastructure, including 5G, submarine and overland fibre-optic cables, satellite ground tracking stations, data centres, whole-of-system integrated solutions such as ‘smart city’ and security-sector information systems, and select ‘over-the-top’ applications such as financial services and processes (fintech) and e-commerce investments. However, other statements emanating from Beijing include any high technology, such as quantum computing or artificial intelligence (AI) applications for big-data analytics, under the DSR rubric.

The DSR concept has thus evolved into an umbrella term for various activities of interest to the Chinese government in the cyber realm. At the same time, there is no comprehensive list of project types that should be considered part of the DSR. An added complication is that unlike BRI projects, which are usually labelled as such, most overseas information and communications technology (ICT) projects that have been undertaken by Chinese companies are not promoted or labelled as part of the DSR. This ambiguity means that the DSR can – and has – been understood differently by different observers or even participants, including Western analysts, Chinese bureaucrats, Chinese companies and Western governments. The debate over the implications of the DSR centres around one question: is it primarily a commercial or a strategic political project, or a combination of both? It is difficult, if not impossible, to answer this question without a common understanding of what the DSR entails. Moreover, technological change is occurring at a rapid pace, and the perception in a year’s time of what the DSR comprises might differ from our understanding today. To reflect the fast-changing nature of China’s private-sector technology industries, a flexible approach to understanding the evolving scope of the DSR is needed.

We would argue that a limited definition of the DSR (involving specific technologies, degrees of government involvement and types of financial support) and a more expansive, inclusive understanding of it are complementary. As Paul Triolo puts it in his chapter:

The DSR is best understood as an umbrella branding effort and a narrative for Beijing to promote its global vision across a range of specific core technology sectors, rather than as a project or initiative that is being directed or implemented centrally by ministries in Beijing, or as the maximalist DSR concept in which all business operations related to the digital economy are lumped together under its rubric.

The DSR originated in a socio-economic narrative promoted by Beijing that focused solely on connectivity and digital economic growth. This suggested a predominance of service-related, infrastructure and platform projects. However, since its inception – and particularly since the beginning of the global coronavirus pandemic in 2020 – Chinese companies have moved on from building digital-infrastructure networks and diversified into collaborating in e-health, AI and other frontier technologies. These projects also receive support – at least vocal, and sometimes financial – from the Chinese government. It is likely that the mix of projects that makes up the DSR will continue to evolve.

Despite its origins as a component of the BRI, the DSR seems to have developed less as a government-driven initiative than organically through the activities of China’s domestic tech giants and ICT industry. It operates according to its own rules: BRI member countries benefit from DSR projects, but the DSR seems to extend beyond the BRI’s geographical boundaries. How, then, is the DSR to be understood as a larger initiative? What role does the government play in such a loosely formulated but strategically imperative initiative? Has Beijing simply piggy-backed on the success of China’s private tech sector, or is there a larger strategic ambition at the core of the DSR? Or is the DSR a reflection of both commercial trends and government aims?

Beyond these questions about parameters and goals, the same concerns about consequences for global security and critical infrastructure previously voiced with regard to the BRI are now being raised about the DSR. At the heart of such international concerns is not the fact that Chinese companies are becoming globally competitive, but rather the implications of the potential for the Chinese Communist Party (CCP) to use such companies to ‘rewire’ the global digital architecture, from physical cables to code. Dominance of the international digital ecosystem by Chinese technology could ultimately shift global norms from a free global cyber commons to competing systems of cyber sovereignty or cyber freedom, creating the potential for a further splintering of the internet. The ultimate question is what the lasting implications of such a project are for global connectivity, security and the geopolitical landscape in the future. What will the world look like in 2049 if China has seized the commanding heights of the world’s digital ecosystem?

In exploring these questions, this Adelphi book is divided into three parts. The first three chapters contextualise the Digital Silk Road, both internationally and domestically. The next two explore the role of the key institutions in the Chinese state and their interaction with Chinese private-sector tech companies that are the key actors in DSR-related activities on the ground. Chapters Six and Seven address the economic, security and governance impact of the DSR in recipient countries. In the Conclusion, we assess the broader impact of the DSR on patterns of economic and technological dependence, on the emerging rules and norms of tech globalisation, and on global geopolitics and great-power relations.

In Chapter One, ‘China’s investment in digital technologies and the Digital Great Game’, Marcus Willett, IISS Senior Adviser for Cyber, does not directly address the DSR but provides the technological and geopolitical context for the contributions that follow. He draws on his deep experience of over three decades in the United Kingdom’s signals-intelligence agency GCHQ to explore how and why China has risen so rapidly in the past two decades to become one of the world’s leading tech powers. He then addresses the external implications through a case study of how the UK government responded to the US government’s campaign against Chinese tech giant Huawei’s 5G mobile-technology business in 2019–20. Finally, Willett turns to the deepening tech cold war between Washington and Beijing, and addresses the question of whether the world is heading towards a bifurcation of the digital domain into two competing systems.

In Chapter Two, ‘Locating the Digital Silk Road in the Belt and Road Initiative’, Robert Koepp, for many years the director of The Economist Group’s Corporate Network in Hong Kong, describes how the DSR emerged as a substantially autonomous component of the BRI. He examines the policy entrepreneurship of Lu Wei, the minister who founded the Cyberspace Administration of China (CAC) and the administrator of China’s vast online censorship apparatus, who was purged in 2017. Koepp’s analysis highlights the increasing attention the Chinese authorities paid to the DSR in the run-up to the second BRF in April 2019. More importantly, he reveals the intricacies of policy formation in China’s political system. The origins of the DSR were by no means the result of a neatly organised top-down process.

To complement Koepp’s detailed description of the origins and evolution of the DSR as formally and minimally construed, one of us (Meia Nouwens) then explores the wider context in Chapter Three, ‘Identifying the Digital Silk Road’. This draws on the IISS China Connects dataset of Chinese overseas ICT projects (which includes all projects involving technologies or supporting goals mentioned in formal DSR policy documents and statements) to examine how the maximalist DSR concept has evolved, who the stakeholders are, how it is financed and how it compares to the BRI. In Chapter Four, ‘The Digital Silk Road and the evolving role of Chinese technology companies’, Paul Triolo then examines the chicken-and-egg questions regarding the commercial and political motivations behind the DSR from the perspective of China’s private tech companies. Triolo, Senior Vice President for China and Technology Policy Lead at Albright Stonebridge Group, focuses on the development of Chinese technology and, on the basis of his extensive connections with leading Chinese scholars, makes the case that China’s private-sector tech firms seeking commercial rewards are the principal drivers of DSR activities on the ground, competing with one another for state support. At the same time, he argues that their activities promote the broader geopolitical goals of the state, and that Chinese private firms in the DSR are likely to become more dependent on government support.

In Chapter Five, ‘The Digital Silk Road and China’s grand strategic ambition’, Damien Ma, Managing Director of the MacroPolo think tank at the University of Chicago’s Paulson Institute, addresses the question of how the DSR relates to China’s broader strategic aims, both domestically and internationally. Ma highlights Xi’s role in articulating specific metrics for China’s ‘national rejuvenation’, a theme that has been central to the CCP since well before it came to power in 1949. Ma describes the DSR as a logical deepening of China’s efforts, from the early 2000s onwards, to promote Chinese companies ‘going out’ into the world. Given both the limited size of the domestic market and the push by Washington against Chinese tech firms, the DSR is gaining in strategic importance to Beijing. Ma then addresses whether China has the capability to achieve its strategic aims. The interdependence between the Chinese government and Chinese tech companies is growing in the face of US pressure, but he also highlights potential tensions between CCP ambitions and private-sector interests.

In Chapter Six, ‘The Digital Silk Road and normative values’, Adrian Shahbaz addresses the question of whether DSR projects aimed at enhancing the public-security capacity of participating countries will enable more authoritarian methods of government. Shahbaz, Vice President for Research and Analysis at Freedom House, argues that the effect on civil liberties and norms will depend upon the type of technology China exports, the political culture of recipient states, and whether those states can or want to implement independent and robust oversight of new surveillance and algorithmic technologies. Through a series of case studies, he shows that where freedom of assembly and association already receive little protection, the DSR appears to have reinforced authoritarian governance, while in fragile democracies, greater political pluralism has been conducive to a degree of public oversight of new surveillance technologies while also leading to resistance by civil society against their use. In established liberal democracies, on the other hand, the effects of the DSR have been relatively neutral. He concludes that the export of the same technologies that China uses to suppress its own population – without the safeguards or transparency claimed for similar Western products – is likely to further erode civil liberties in authoritarian states, to prove threatening in states where institutions or regulations remain fragile, and to challenge existing norms even in liberal democracies. The DSR also enhances China’s influence, prestige and economic leverage, contributing to a broader Chinese campaign for an internet under the control of often repressive governments rather than an open one imbued with liberal values.

In Chapter Seven, ‘Balancing prosperity and security along the Digital Silk Road’, Scott Malcomson shifts the focus from Chinese actors to recipient states. The author of Splinternet: How Geopolitics and Commerce Are Fragmenting the World Wide Web (2016) starts by examining how individual countries balance the economic benefits of engaging Chinese tech companies against the risk that those companies and their tech will serve Chinese security at the expense of their own. Not surprisingly, the balance struck between security and prosperity has depended on how much a given country thought it already had of each. As global wariness of Chinese technology increases, Malcomson describes how China’s remarkable successes through the DSR have left it more exposed, in terms of the future prospects of its multinationals and its own tech sector, than it expected to be. He raises the prospect that Chinese companies may not reap the rewards of Beijing’s enormous investment in building a global telecommunications infrastructure. Even if they do, their dependence on external sources of revenue may lead them to become more vulnerable to the preferences of foreign governments. He concludes that a trend towards local control and data sovereignty reduces the leverage of current and emerging technology superpowers such as China and the US, but though Beijing and Washington appear to be choosing the security of exclusive markets, it is to their ultimate advantage not to force other states to choose which camp to join, which would dampen prosperity for all concerned.

In the Conclusion, we examine the broader and longer-term implications of the DSR. We first explore the interplay between the DSR and global geopolitics, and focus on the question of why China’s shift towards greater technological assertiveness has failed to enhance its global standing and influence in the global geopolitical hierarchy. We then examine the changing domestic context facing China’s large tech firms, whose support from the state has enabled them to exert outsized influence against more established actors in overseas markets. What Beijing deems acceptable behaviour by Chinese tech firms, however, is now changing. Finally, we look at the question of tech bifurcation, and the related issue of whether there will be Western or local competitors for China’s tech champions in the various DSR geographies. Rather than a straightforward decoupling of the Western and Chinese digital domains, the more likely outcome is a patchwork of overlapping legal and normative frameworks.