Made in China

A Digital Agenda for the Quad
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An Initiative by

Dr Samir Saran

Observer Research Foundation

Dr Rajeswari Pillai Rajagopalan

Centre for Security, Strategy and Technology, Observer Research Foundation

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In the Indo-Pacific and beyond, China’s growth in capabilities and political authoritarianism are now threatening to alter how we engage with technology and digital domains. China believes it has the right to access other nations’ information and networks without offering up access to its own. This is not a simple techno-mercantilism. There is a single purpose to China’s deepening investments in existing and future technologies: furthering the agenda of the Chinese Communist Party (CCP).

For Beijing, technology is about both national security and ideology. Under Xi Jinping, it will use the information age to rewrite every assumption of the postwar period. Countries outside China must join together to seek open, safe and inclusive technology and digital platforms and products.

There are five main ways in which we can shape national, regional and global engagement with our digital world. These must also drive the purpose and direction of the Quad countries (the United States, Australia, Japan and India) as they strive to create a technology and digital partnership in the Indo-Pacific.

‘China tech’ was for the CCP initially about managing the social contract within China. Now, the CCP is weaponising and gaming other nations’ democracies, public spheres and open systems. It is creating a digital insurgency that allows it to delegitimise its opponents on their own political turf. This goes beyond episodic interference in elections. The CCP uses American forums such as Twitter and Facebook to critique the domestic and foreign policy of nations such as India. Wolf warriors seek to shape the information space internationally while China and the CCP remain protected behind the Great Firewall. The unimpeded global access China is allowed under some perverse notion of free speech must be questioned; internet propaganda endorsed by authoritarian regimes cannot and should not go unchecked. As a first step, the world will have to embrace a political approach to repel the digital encroachments we are witnessing. The European Union offers a model – just as its General Data Protection Regulation sought to rein in the US technology giants, we need laws that limit China’s access to the public spheres of open societies, thereby curtailing its global influence.

Today, all digital (silk) roads lead to Beijing. Many developing countries rely on China for their technology sectors. From control over rare earths and key minerals to monopoly over manufacturing, China commands the digital spigot. The Quad countries and others in the Indo-Pacific must seek and encourage diversification. Affordable, accessible products and innovations must emerge in the digital space. From resilient supply chains to diversity of ownership, a whole new approach is needed to prevent the perverse influence of any single actor. This is the second way to shape global patterns of digital engagement.

The Chinese under Xi have embraced the dangerous essence of the Chinese phrase ‘borrowing a boat to go out to the sea’. The CPC has essentially borrowed all our boats to further their agenda.

Universities in the developed world, their media, their public institutions and even their technology companies are serving and responding to missives from the Middle Kingdom. Many journalists have exposed the Western media’s promiscuous entanglements with a Beijing that artfully co-opts them into its propaganda effort. In the digital age, this cannot be ignored. Countries will soon be faced with a digital fait accompli – signing on to Pax Sinica. As a third way to enhance engagement, it is time to protect liberal institutions from their own excesses.

China has attempted to internationalise its currency with the launch of its own digital currency. After banning financial institutions and payment companies from providing crypto-related services in May, China launched a crackdown on computer-powered crypto mining in June, and a blanket ban on all crypto transactions and mining in September, clearing the way for its digital renminbi (digital RMB). With the development of its own central bank digital currency, the Chinese government will now have the power to track spending in real time. It will have access to the entire digital footprint of a citizen or a company. This will provide Beijing with an unprecedented vault of data, which it can use to exercise control over technology companies and individuals.

The rise of China’s digital RMB has the potential to challenge the status of the American greenback. For decades, the US dollar has been the world’s dominant reserve currency. Yet countries such as Iran, Russia and Venezuela have already begun using the Chinese yuan for trade-related activities or replacing the dollar with the yuan as reference currency. China can shape all three attributes of the ‘ideal’ currency, also referred to as the ‘Impossible Trinity’: free capital flow, a fixed exchange rate and independent monetary policy. It is a matter of time before it uses currency as part of its wider geopolitical plans. And with its past experiments with many countries on ‘trade in local currency’, it will have the capacity to create disruptions in the global monetary system. This can only be countered with two measures: one, depoliticising the existing dollar-led currency arrangements (the tendency to weaponise the SWIFT system – a giant messaging network used by banks and other financial institutions to transmit secure information – and to employ ad-hoc economic sanctions) and two, investing in the economic future of the emerging economies that currently depend on China.

Lastly, China is seeking technological domination not only terrestrially but also in outer space. China has invested considerably in space technology and engages in counterspace activities. These include suspected interference in satellite operations, both through cyberattacks and ground-based lasers. There are growing fears that Chinese technologies developed for ostensibly peaceful uses, such as remote satellite repair and cleaning up debris, could be employed for nefarious ends. The inadequate space governance mechanisms is an opportunity for the Quad to develop situational awareness in the space realm to track and counter such activities, and to develop a new set of norms for space governance.

The Quad’s agenda is prescribed by China’s actions. It will have to be a political actor and have the capacity to challenge China in the information sphere and the technology domain. It will need to be a normative power and develop ideas and ideals that are attractive to all.

From codes and norms for financial technologies to the code of conduct for nations and corporations in cyberspace and outer space, the Quad has the responsibility and opportunity to write the rules for our common digital future.

The Quad will also have to be an economic actor and build strategic capacities and assets in the region and beyond. It will have to secure minerals, diversify supply chains and create alternatives that ensure the digital lifelines are not disrupted.

Most importantly, the Quad will need to be an attractive partner for others to work with. This is its best means to counter China’s dangerous influence.

The Sydney Dialogue acknowledges the Gadigal people of the Eora Nation, the traditional custodians of the land and pays respect to the Elders both past and present. We honour and respect the significant role they play for our community.

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The Sydney Dialogue acknowledges the Gadigal people of the Eora Nation, the traditional custodians of the land and pays respect to the Elders both past and present. We honour and respect the significant role they play for our community.

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