14 May 2020, NIICE Commentary 4649
Smritirekha Sarma Haloi & Rohit Kishore
COVID-19 has stirred the world in an unparalleled way. While countries and their citizens desperately await the restoration of normalcy, the present condition is also a test of resilience of the global order, while it also exposes the reality of being ‘globalised’ in today’s world. Since the movement of people and the interconnectedness has been affected the most, COVID-19 throws a major hurdle to China’s Belt and Road Initiative (BRI), the cornerstone of which is global connectivity.
Launched in 2013 by Chinese President Xi Jinping, the BRI is a mega trans-national infrastructure and global connectivity project linking five continents through land and sea corridors and several industrial pockets that extends over 138 countries across the world. The COVID-19 pandemic has caused major disruptions across all the important propellers of the BRI. From disruptions in global supply chains and global shipping industry, to restrictions in movements of Chinese migrant workers, it has shaken everything running the BRI. The outbreak has also led to shifting priorities among the stakeholders of the project, especially in the developing world, for whom medical and health assistance are a bigger priority at the moment, compared to continuing infrastructure projects. In fact, many developing nations in Asia and Africa who are beneficiaries of billion-dollar loans given under the BRI scheme, are now requesting for relief in repayments. Even before the pandemic, China’s growth had already taken a downturn when it was reported that the Chinese economy hit a near 30-year low of 6.1 per cent GDP growth in 2019. Despite these challenges, China intends to keep this mega project afloat by focusing on the non-physical components of the BRI, the most important among them being the ‘Digital BRI’.
Ever since its inception in 1949, the Chinese science and technology sector has received significant attention during the development of the country. Although the concept of Digital Silk Road has made some important progress in the past few years, it has hardly managed to come to the limelight since the focus has always remained on the high-end physical infrastructure projects like ports, corridors and railways. The National Development and Reform Commission under the Ministry of Foreign Affairs in China came out with a ‘White Paper’ in 2015 which stated the goal of creating a China-centric digital infrastructure, by building of cross border optical cable networks, expansion of Chinese technology corporations and accessing a large pool of data. While addressing the National Congress of the China Association for Science and Technology in 2016, President Xi Jinping stated his vision of China becoming a global innovator by 2030. China has been seen making profound headways in the digital arena in general and specifically in fields of computer technologies, quantum mechanics, supercomputing and artificial intelligence. So, it comes as no surprise that China is tactfully leveraging its digital prowess even amidst the COVID-19 pandemic.
The global shut down in the wake of COVID-19 has created a massive demand for internet access, since most of the people are confined to their homes, and are looking not only for entertainment, but also for communication, telemedicine, video conferencing, e-commerce, research, webinars and online classrooms. China has continued to call for the expansion of 5G investments, to the extent that on 21 February 2020, the Communist Party’s Politburo declared that expansion of 5G networks is crucial for China’s economic recovery. Xi Jinping too, in one of his addresses, deeply emphasised on the need to expedite the expansion of 5G networks and data centres, and reiterated on the need for the growth of digital economy and digital industrialisation. The 5G telecom networks are complementing the overburdened hospitals and doctors with remote consultations, especially in Hubei province, which is the epicentre of the virus. Although the push for 5G is to mitigate the impact of the virus, in reality, the Chinese global 5G network is a long-term government policy, and Beijing plans to reap the sustained economic benefits it produces to push the Digital BRI further.
With digital technology gaining a newfound importance in people’s lives, be it working remotely, in online classrooms or in the shift from retail to e-commerce, Chinese tech companies like Alibaba’s DingTalk, Tencent’s WeChat Work and Huawei’s WeLink provide all the incentives to establish a market share for themselves outside China. Opportunities for Chinese medical technologies abroad are also huge, especially in developing countries, where health infrastructure is inadequate. Online doctor consultations have hiked unprecedentedly and applications like Alibaba Health and Ping A Good Doctor are spearheading the Chinese Med-Tech arena in the wake of the pandemic. COVID-19 comes as a good opportunity for these companies to extend their markets abroad, especially in the BRI-ally countries.
China also has the advantage of leveraging its already existing hi-tech digital surveillance system. The government, in collaboration with tech giants like Alibaba and Tencent, has come to develop a colour-coded health rating system which tracks millions of Chinese citizens daily. Alipay rolled out a health QR code system which assigns three colour codes to the users based on their travel, medical and contact histories. It is quite natural for these tech companies to explore foreign markets for delivering these products and services. With all the groundwork already in place, the BRI countries can be the most potent beneficiaries of these products. Countries like Czech Republic, Colombia, Ghana, Israel, Norway, Singapore and India have already followed China’s footsteps in introducing contact-tracing mobile applications.
In the wake of COVID-19, digital connectivity is one of those unfathomable tools that can help the world fight and cope with the deadly virus. Adequate digital infrastructure systems in place can help quicken the response to any situation, especially in developing countries. Chinese digital tech appears more lucrative for these countries compared to their western counterparts, because Chinese tech usually comes with fewer intellectual property protection norms.
With the physical BRI coming to a temporary standstill, China can now focus on embedding its digital competency deeper across the BRI zones. Prior to the pandemic, the BRI had received criticisms from across the world due to lack of transparency, financial sustainability, high interest rates, and meddling with the local community’s access to jobs within the BRI projects. There have been many instances concerning the security of the Chinese workers in these countries. China being the epicentre of the pandemic, Chinese workers are more likely to face discriminations at the hands of the local people. In such a case, digital technology serves to be subtler, with lesser visibility and causing lesser disturbances among the local communities.
Having discussed about the opportunities, the digital BRI scheme is not devoid of challenges. The US along with its allies can create major roadblocks for the Chinese Digital BRI initiative to expand. The US and China are already grappled in a trade war, and COVID-19 will accentuate this trade war further, since much of humanity remains quarantined inside their homes, and a digital, data-driven economy is on the rise. The US, wanting to gain an upper hand, can quickly leverage its locally-developed newer technologies to outdo China. China’s major competitive advantage lies in its ability to offer products at cheaper rates. However, with majority of investors and venture capitalists being based in the US or with its ally countries, the federal government can look at them to match China’s pricing by means of cost absorption, much like when the shale oil industry was at a nascent stage in the US.
It is pertinent to say that the pandemic may end but its aftereffects will be felt for years to come. Digital technology will have an amplified role to play in people’s lives. The pandemic has already proven that China can be a global provider of digital infrastructure. With its already established digital prowess, China has the potential to play the global leader even in the post-COVID-19 world.
