[Feature: How to Perceive China] Jun Osawa: China and the Dream of Digital Techno-Hegemony

2021/08/05

The current strategic goal of the Xi Jinping administration is to achieve the "Chinese Dream," the great rejuvenation of the Chinese nation, by 2049, the 100th anniversary of the country's founding. Regarding this "Chinese Dream," Michael Pillsbury, who has analyzed China within the U.S. government for over 30 years, warns in his book "The Hundred-Year Marathon" (Japanese title: China 2049) that it involves usurping the position of the hegemon from the United States and establishing a China-centric world order. What conditions are necessary for China to overtake the U.S. and become the world's leading power—a "hegemon" in international political terms—by the middle of this century? Furthermore, what policies is China implementing to satisfy the conditions of a hegemon? This article discusses China's movements regarding the acquisition of digital technology hegemony, which is becoming a focal point of the current U.S.-China confrontation.

Semiconductors, 5th generation mobile communications (5G), and undersea cable networks. These are currently the focus of the U.S.-China conflict. For example, the National Defense Authorization Act passed by the U.S. Congress this January stipulates strengthened support for semiconductors and next-generation communication technologies, and in June, the U.S. Federal Communications Commission (FCC) began procedures to exclude Chinese-made telecommunications equipment from within the United States. To understand why these information technologies have become the focus of the U.S.-China conflict, it is necessary to look back at the history of hegemons and information and communication technology.

Two hundred years ago, in the first half of the 19th century, Britain, which was the first to succeed in the Industrial Revolution, became the world's hegemon. "National power," which determines a country's strength, includes technological capability in addition to population and resources, and what propelled the British Empire to hegemony were steam engines using coal and ironmaking technology using coke. However, the hegemony of the British Empire, centered on its colonies, was supported by British naval power, the power of the pound as the reserve currency and finance, and the undersea telegraph information network that quickly transmitted information essential for national defense and financial transactions. The undersea cable network centered on Britain crossed the Atlantic to the North American continent in 1866, connected to Bombay in colonial India in 1869, connected to Singapore and Hong Kong in 1871, and Australia in 1872. In 1885, the African circuit cable was completed, bringing information superiority to Britain.

In Japan, an undersea cable was first connected to Nagasaki in 1871. Incidentally, the word for telegraph (denshin) was coined by Yukichi Fukuzawa, who introduced communication technology innovation to our country as "denki denshin" (electricity transmitting messages) in his 1866 work "Things Western (Seiyō Jijō)."

The United States, which became the hegemon of the 20th century, is also supported by its power to control information networks in addition to national powers such as overwhelming economic, military, and technological strength. Today's internet is transmitted via optical undersea cables stretched across the globe, but the flow (routing) of communication is controlled by about a dozen telecommunications carriers worldwide called Tier-1, which sit at the top of the communication tree structure. More than half of these are U.S. companies. Furthermore, the management of technical rules for global internet communication is handled by ICANN, a U.S. non-profit corporation established in 1998, over which the U.S. government maintains a certain level of influence.

Furthermore, the U.S. has long maintained superiority in outer space, which is indispensable for modern military and civilian activities, such as GPS and communication satellites. In this way, hegemons have maintained their status through the power to control information in addition to overwhelming national strength. China, seeking to achieve its "dream" by 2049, is also attempting to build the power to control information.

The "Belt and Road Initiative" is the foreign policy launched by the Chinese government to embody the "Chinese Dream." The Chinese government announced the "Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road" in March 2015, forming the current "Belt and Road Initiative." The initiative is a modern version of the Silk Road construction concept, connecting countries from China to Europe across the Eurasian continent via the land-based "Belt" and the maritime "Road."

The "Digital Silk Road" initiative aims to realize this "Belt and Road Initiative" in the world of information and communication. Premier Li Keqiang first announced this idea at the Davos Forum in January 2015. The March 2015 "Vision and Actions" (mentioned above) presented the overall picture of a communication infrastructure development concept centered on hardware, aiming to build a "Digital Silk Road (Information Silk Road)" spanning the Belt and Road through: 1) construction of land-based cross-border fiber optic networks, 2) development of optical undersea cables, and 3) provision of satellite communication services.

In terms of hardware communication network development, China Telecom launched the "Transit Silk Road" cable in 2016, an ultra-low latency 100G capacity cable connecting China and Europe, and is also building cables connecting to Pakistan and Myanmar along the Belt and Road. In the field of satellite communications, China Satellite Communications Group, under the China National Space Administration, is building a satellite communication network within the Belt and Road region using the Ka-band (enabling high-speed, high-capacity communication using high-frequency bands). This satellite communication uses the "Zhongxing" series of communication satellites launched by China's domestic Long March 3B rockets.

Additionally, in 5th generation mobile communications (5G), which serves as the information and communication infrastructure for the IoT era, Chinese companies hold 30% of related patent applications. Huawei holds 16% of essential patents, and ZTE holds 11%. Based on the technological foundations of these Chinese telecommunications equipment companies, the Chinese government is actively providing strategic assistance for communication infrastructure in Belt and Road countries. Chinese companies such as Huawei, ZTE, and China Mobile are entrusted with developing mobile communication infrastructure in Asian and African countries at low cost, receiving support from Chinese government ODA and government-affiliated financial institutions.

Regarding optical undersea cables, China Unicom laid the "AAE-1" undersea cable connecting China and Europe, which began operations in June 2017. Furthermore, the South Atlantic Interlink (SAIL) undersea cable, the first intercontinental laying by Huawei's subsidiary Huawei Marine, began operations in August 2018. Huawei entered the undersea cable laying business in 2008 by establishing a joint venture with Britain's Global Marine Systems, which has a 150-year history. Within about 10 years, they acquired the technology from the joint venture and have grown to the point where they can independently lay undersea cables circling the African continent. Traditionally, laying long-distance undersea cables required high technological capability and was monopolized by Western companies from the U.S., UK, France, and Japan. The laying of these cables has made it clear that Chinese digital techno-companies are rapidly accumulating technological strength and are pressing hard against Western companies.

Subsequently, this Digital Silk Road initiative was renamed the "Digital Silk Road (Shuzi Sikou Zhilu)," and it has become clear that the Chinese government aims for global expansion including IoT platforms such as electronic payments and e-commerce—the software side. President Xi Jinping stated at the first Belt and Road Forum for International Cooperation in May 2017, "We should make the Belt and Road a path of technological innovation and build the 21st-century Digital Silk Road." Furthermore, at the second forum in 2019, memoranda of cooperation for Digital Silk Road construction, including the "establishment of bilateral e-commerce cooperation mechanisms" and "joint construction of cross-border e-commerce platforms," were signed with 16 countries along the Belt and Road. These memoranda include the adoption of Chinese standards, making it clear that China aims not only for cooperation in building communication infrastructure like 5G networks but also for control over the platforms that run on top of them.

For example, the electronic payment platform of Ant Financial, an Alibaba Group company that operates Alipay, has already spread to Southeast Asia and India. Japan's PayPay is also based on India's Paytm, which transplanted Alipay's technology. These electronic payment apps can collect and sequester big data such as who bought what (personal information), what was bought (payment information), and where it was bought (location information). By sequestering big data, it is possible to grasp not only individual behavior but also personal preferences, lifestyles, and political tendencies from purchase histories and other data.

Furthermore, regarding international rules and management of the internet, China is challenging U.S. hegemony. With the support of developing countries, China advocates for a government-led model for internet governance rules rather than the ICANN-centered model based on voluntary non-governmental stakeholders, and proposes placing the internet under the management of the United Nations' International Telecommunication Union (ITU).

As we have seen, China's Digital Silk Road initiative reveals an ambition to deploy "software" in the form of IoT platforms on top of the "hardware" of information and communication infrastructure, sequestering information not only from the Eurasian continent but from the entire world, and wresting the power to control information away from the United States.

How did China acquire the foundation for cutting-edge digital technology that rivals the United States in the short period of about 30 years since the 1989 Reform and Opening-up? As Taizo Yakushiji states in his book "Techno-Hegemony," technology spreads from country to country through imitation, and technological nations rise through the improvement (emulation) of imitated technology; however, in China's case, the methods are aggressive.

For example, let's look at the information and communication technology essential for establishing digital hegemony. There was a major telecommunications equipment company in Canada called Nortel. Descended from Bell Labs, which invented the telephone, the company was a pioneer that early on developed digital technology for fiber optics and telephones, and manufactured control switches and communication equipment indispensable for the internet age. Nortel went bankrupt in 2009 due to factors such as the emergence of low-priced competing products, but a major cause was cyber attacks from China. Brian Shields, a former senior systems security advisor at Nortel, stated in a media interview that "extensive cyber attacks by China were a factor in the company's collapse." In fact, it has been revealed that Chinese cyber attack groups had been stealing documents including technical manuals, research reports, business plans, and employee emails for several years starting from 2000.

After Nortel's bankruptcy, the company's mobile communication technology spread to its competitor, Huawei. Currently, Tong Wen and Zhu Peiying, who have been awarded the title of "Huawei Fellow," both worked in wireless technology research at Nortel for many years before joining Huawei in 2009, where they have become central figures in next-generation mobile communication research.

Beyond this case, examples of advanced technology being stolen from companies in developed nations through cyber attacks are too numerous to mention. One theme of the currently heating U.S.-China conflict is the struggle in cyberspace over intellectual property and trade secrets held by private companies. The U.S. is intensifying its criticism of China, alleging that China is forcing unfair technology transfers on U.S. companies, including cyber information theft. The U.S. Trade Representative (USTR) published an investigation report on China's technology transfer policies in March 2018, naming and criticizing the Chinese government, pointing out that it conducts cyber attacks against U.S. companies to steal business secrets and intellectual property in line with the government's strategic goals.

Cyber attacks originating from China involve the theft of intellectual property that contributes to China's scientific and technological development and trade secrets that give Chinese companies a business advantage. The targets of these cyber attackers are industries such as: 1) next-generation information technology, 2) new energy vehicles, 3) aerospace, 4) marine engineering, 5) new materials, and 6) power equipment. These are closely related to "Made in China 2025," China's long-term strategy for acquiring technological superiority.

"Made in China 2025," formulated by China with the aim of establishing itself as a "manufacturing superpower," is a 10-year industrial policy announced by the State Council of China in May 2015. The policy document states that, in conjunction with the realization of the "Chinese Dream" in 2049, the first stage of establishing status as a manufacturing superpower (joining the ranks) will be achieved by 2025, the second stage of reaching a middle level among manufacturing superpowers (becoming an innovation-driven country) by 2035, and the third stage of establishing a leading position among manufacturing superpowers (establishing competitive advantage in most fields) by 2049. Furthermore, ten key areas to be cultivated to realize a manufacturing superpower are defined: 1) next-generation information technology, 2) new energy vehicles, 3) aerospace, 4) marine engineering (high-tech ships), 5) advanced rail transit, 6) robotics and machine tools, 7) power equipment, 8) new materials, 9) biopharmaceuticals and medical devices, and 10) agricultural machinery.

"Made in China 2025" can be read as a long-term strategy for China to seize techno-hegemony. Consequently, there is a growing sense of crisis within the U.S. that information-theft cyber attacks targeting intellectual property, conducted with state involvement, will strengthen China's technological power and, in the medium to long term, have a serious impact on the balance of power between nations, propelling China to the status of a hegemon.

Among these, space is one of the fields China is focusing on particularly. As an important field directly linked to military and civilian use, space development symbolizes a country's technological strength and is directly linked to the promotion of national prestige; thus, fierce competition was also conducted between the U.S. and the Soviet Union during the Cold War. China's space development dates back to ballistic missile development in the 1950s, but it began to rapidly catch up with the U.S. after entering the 2000s. In 2003, it succeeded in manned spaceflight with "Shenzhou 5," and in 2013, it succeeded in a lunar landing with "Chang'e 3." In 2021, it succeeded in putting the Mars probe "Tianwen-1" into orbit around Mars. In terms of space development, it already rivals the U.S. completely, operating meteorological satellites (12), positioning satellites (Chinese version of GPS, 55), image collection and radio wave collection satellites (17 civilian, 60 military), communication satellites (31), and early warning satellites (7). In terms of space utilization in the military field, it possesses capabilities comparable to the U.S. military.

Concurrent with the acceleration of China's space development, cyber attacks targeting space technology are also increasing. On April 20 of this year, the National Police Agency referred a male member of the Chinese Communist Party to prosecutors on suspicion of unauthorized creation and use of private electromagnetic records. This man had rented servers within Japan for the purpose of providing them to the Chinese cyber attack group "Tick." This "Tick" group has been executing cyber attacks since around 2006 against approximately 200 companies and research institutions related to Japan's defense and aerospace, including JAXA, Mitsubishi Electric, Ishikawajima-Harima Heavy Industries (IHI), and universities. Outside of our country, space-related research institutions such as NASA in the U.S. and DLR in Germany have also become targets of cyber attacks.

In this way, to acquire techno-hegemony, China has been targeting specific areas based on a long-term strategy and acquiring technology using even cyber attacks.

As we have seen, China well understands the history of how hegemons like Britain and the United States maintained their status through the power to control information in addition to overwhelming national strength. Therefore, in realizing the "Chinese Dream" of 2049, it is likely attempting to acquire the power to control information and build digital hegemony through the construction of the "Digital Silk Road." Regarding technology, the source of national power, it has defined a long-term strategy to seize techno-hegemony in the form of "Made in China 2025," and according to that strategy, it is forcing "quiet technology transfer" on developed nations using cyber attacks. The results are evident in next-generation information and communication technology and space development, enabling technological development at a speed impossible through independent effort alone. The day when China fulfills its dream of digital techno-hegemony may be near.