One of the most pressing national security challenges that Australia, the United States, and other like-minded partners face in the Indo-Pacific is the intensifying competition over who will control digital infrastructure and platforms. Digital technologies can be used to advance political, military, or economic goals in the region. The infrastructure, platforms, and governance rules for information technology have an enormous impact on who has the ability to collect and control the flow of information.
Nations that value free, open, and transparent digital development need to collaborate to set standards and norms to guide technological development. They must work together to ensure technology bolsters democratic development, rather than strengthening autocratic trends, and that such technologies remain trusted and protected from malign actors that seek to undermine the sovereignty and freedom of Indo-Pacific nations.
The brisk progress of digital technologies risks outpacing the ability of governments and international organisations to govern and protect those technologies. Multilateral coordination and cooperation among like-minded nations must be expedited in order to harness the benefits of technological development while still preventing its malign use.
Who will control the information environment?
The global digital ecosystem is rapidly evolving. Technologies such as 5G wireless networking, Internet of Things (IoT), artificial intelligence (AI), social media, cybersecurity, and ubiquitous surveillance all contribute to a changing information landscape. Unfortunately, China’s rise as a global technology leader has undermined, rather than strengthened, a free and open information environment. Early hopes that “growing interdependence would have a liberalising effect in China” proved unfounded. Chinese Communist Party (CCP) leaders successfully erected a Great Firewall to keep out the free flow of information to Chinese citizens and have built an entirely separate bifurcated digital ecosystem within China that CCP leaders can control. Censorship, state propaganda, and ubiquitous surveillance are key features of the CCP’s model of an ideal information environment. While the CCP has nurtured this model inside China, the emergence of Chinese tech firms as major players on the global scene threatens to export elements of this illiberal information model abroad.
Huawei’s emergence as a dominant force in the global 5G market—and a potential cybersecurity and supply chain risk—is a harbinger of China’s challenge to sustaining a free and open global information environment. This contest is unfolding at each layer of the digital ecosystem: in physical infrastructure (e.g., telecommunications networks, fibre-optic cables); platforms (e.g., search, social media); and governance (e.g., rules, norms, and laws). In many instances, especially for infrastructure and platforms, market dynamics create a winner-take-most dynamic, where a single company often dominates the marketplace. Democracies will need to work together to ensure the information environment relies on trusted vendors operating in a manner consistent with democratic principles.
The physical infrastructure that undergirds the modern information environment is critical to the security of our digital systems and supply chains. Control over digital infrastructure can enable an actor to exfiltrate data, steal information, or hold systems at risk through coercion, acts of sabotage, subversion, or loss of access. Even tested systems believed to be secure could be later undermined through a routine software or hardware update if relying on an untrusted vendor. Dependencies on untrusted vendors are major supply chain vulnerabilities, with disruption and potentially loss of access if the vendor withholds parts, repairs, or upgrades. Reliance on untrusted vendors for critical digital infrastructure is not merely a cybersecurity risk—it is a risk to a state’s national security and sovereignty.
Nations in the Indo-Pacific region and around the world have begun to push back on attempts by the People’s Republic of China (PRC) to control their critical digital infrastructure, with contests unfolding over 5G wireless telecommunications and undersea fibre-optic cables.
5G wireless telecommunications
China’s aggressive political and military actions throughout the Indo-Pacific in recent years have driven countries to reconsider allowing Chinese companies, like Huawei, to invest in their 5G infrastructure. Australia and Japan were early leaders in recognising the risk of Chinese companies’ components in their telecommunications infrastructure, effectively banning Huawei from 5G networks in 2018. The United States followed suit in 2019, and various European countries subsequently took steps to exclude Huawei equipment from their future networks (although often without adopting an outright ban that would risk angering Beijing). India similarly moved in 2020 to phase out Huawei technology from its networks, although without taking the formal step of issuing a ban.
India’s decision on whether Huawei would be involved in India’s 5G roll-out (still some time away) appears to have been influenced by the India-China border clashes that took place last spring. By early May 2020, it was apparent that China had taken up military positions at several different locations along its disputed border with India. On 15 June, a major clash between their troops in the Galwan River Valley resulted in the deaths of 20 Indian soldiers and at least four Chinese troops. The border crisis of 2020 marked a seminal event in India-China relations and will likely shape Indian calculations toward China for years to come.
Before the 2020 border crisis, there had been active debate among Indian leaders on the pros and cons of allowing Huawei into India’s future 5G networks. Indian Prime Minister Narendra Modi’s emphasis since taking power in 2014 on making India—of which six percent of its population live in extreme poverty— a digitally-empowered society meant inexpensive 5G solutions, like that offered by Huawei, were extremely attractive. Following last year’s border clash, however, Indian leaders decided to use investment restrictions to exclude Chinese companies from participating in India’s upcoming 5G trials. India did not include Chinese companies in a list of vendors invited to participate in 5G trials planned for 2021.
Many nations have come to realise the risks from relying on critical infrastructure from a firm that is ultimately beholden, by virtue of China’s political system, to the Chinese Communist Party. Reports about security vulnerabilities in Huawei’s systems or the company’s ties to the PRC party-state are troubling, but more fundamentally Huawei, like other Chinese firms, lacks independence from CCP coercion in China’s political system. Once another country is dependent upon China for economic goods or critical technologies, CCP leadership will not hesitate to use that leverage to coerce other countries, as many nations have experienced.
In 5G and other technologies, Chinese companies are no longer copycats, but neither are they clear technology leaders. Huawei’s market position in 5G networks doesn’t stem from any technology advantage but rather the fact that the Chinese government has provided an estimated US$75 billion in state subsidies. These massive subsidies allow the company to undercut its competitors on price, engaging in predatory pricing practices to gain global market share.
Democratic nations will need to work together to build a network of trusted suppliers for 5G networks and other critical technologies. Last summer, the UK proposed an alliance of ten democratic nations made up of the G7 countries plus Australia, India, and South Korea to work together to develop an alternative group of 5G equipment suppliers to avoid reliance on Chinese companies. UK Prime Minister Boris Johnson made the proposal shortly following a reported UK decision to eventually ban Huawei from involvement in the UK’s 5G network, reversing a decision made six months prior to allow Huawei a limited role in UK 5G networks. The UK’s apparent shift on the desirability of allowing Huawei to play a role in the country’s 5G network development is yet another sign of the growing global awareness of the threats posed by Chinese digital companies to national freedom and sovereignty. Given the varying degrees of concern about the threat from Huawei among these ten nations, however, it is too early to determine whether they could indeed forge a coherent plan to deal effectively with the challenge.
Undersea fibre-optic cables
Indo-Pacific nations similarly require trusted networks to link their countries via undersea fibre-optic cables. Given the foundational nature of undersea cable infrastructure to the flow of growing amounts of data and information and the operation of the global financial system, it is imperative that undersea cables are treated and protected like other critical technologies and infrastructure. Since they are often constructed by multinational consortiums, there must be cooperation among countries with concordant views and interests in leading their construction. Further complicating the effort to protect and secure undersea cables is the fact that these massive cable lines traverse international waters, joining different countries and continents. This means there is no single governing system or legal framework to ensure their protection or guide their use.
China is aggressively pursuing undersea cable construction across the globe. Huawei Marine (until recently a subsidiary of Chinese telecommunications giant Huawei) has built or repaired nearly 100 of the world’s 400 undersea cables. However, American companies like Google, Facebook, Microsoft and Amazon own or lease nearly half of the global undersea bandwidth. The Chinese appear to view undersea cable laying—not strictly through a commercial prism—but as a strategic operation in a battlefield over data and information control. In 2020, Huawei Marine was divested from Huawei Technologies and is now majority-owned by another Chinese firm, Hengton Optic-Electric, following U.S. sanctioning of Huawei Technologies. However, Huawei Marine is still listed in the U.S. Department of Commerce “Entity List,” which restricts the sale of U.S. goods and technology to the company.
Australia has been a leader in resisting China’s attempt to dominate the undersea cable industry. In January 2018, Australia took control of a project to build a cable from Australia to the Solomon Islands that was originally led by Huawei Marine. In October 2020, the United States worked with Australia and Japan to finance a submarine internet cable to the Pacific Island nation of Palau. This cooperation was possible under a Memorandum of Understanding the three countries signed in 2018, enabling the U.S. Development Finance Corporation, the Japan Bank for International Cooperation, and Australia’s Department of Foreign Affairs and Trade and Export Finance and Insurance Corporation to work together to mobilise private capital to support major infrastructure projects in the region.
Similar contests are playing out over digital platforms, such as social media apps, that control the information seen by billions of people. Roughly half of the world’s population uses social media. The biggest platforms, such as Facebook and YouTube, have billions of users. China has built its own censored social media ecosystem, sequestered from the free and open internet, giving rise to Chinese social media titans, including Tencent (which owns WeChat, QQ, and Qzone), and ByteDance (which owns TikTok and Douyin). Some Chinese platforms have major user bases, due to China’s large population. WeChat has over 1.2 billion users. Yet many Chinese social media apps have struggled to gain traction outside of China, with their international user base often limited to Chinese diaspora who use platforms such as WeChat to stay connected to friends and family back home.
TikTok was the first Chinese-owned social media app to successfully break into the global market and has seen rapid growth in India, Indonesia, Japan, Russia, the United States, and Europe since 2018. Yet TikTok’s emergence as a global social media platform has, like Huawei’s role in 5G networks, led to concerns about the CCP’s ability to use the company as a tool for data collection and information control. In 2020, both India and the United States took actions against TikTok. The U.S. government attempted to force a sale from TikTok’s parent company ByteDance, a deal which currently remains hung up in U.S. court battles. The Indian government banned the app outright, part of a massive ban of over 200 Chinese apps following a serious escalation in border tensions in mid-2020. The app ban was part of a series of measures India took to lessen its economic and technological dependence on China. India’s decision to ban the Chinese apps was a major setback for China’s top tech firms, given the tremendous market potential within India.
Control over social media platforms raises similar concerns to control over physical digital infrastructure. Data privacy is one concern, with the risk that companies could exfiltrate user data out of a country and it could conceivably be accessed by the Chinese government for various purposes, such as intelligence collection. Social media platforms’ algorithms, however, represent in some ways an even bigger concern—one that is oft-overlooked in debates about the risks of Chinese-owned social media apps such as TikTok. Social media companies’ algorithms have enormous power to shape the content seen by viewers, and the algorithms’ opaque rules are closely guarded trade secrets. On numerous occasions, independent experts have identified censored political content on TikTok, including images and videos critical of the Chinese government. In 2019, the Guardian newspaper released leaked documents from TikTok detailing internal guidance to censor political content including “inciting the independence of … Tibet and Taiwan” and “demonisation or distortion of local or other countries’ history such as the Tiananmen Square incident.” At the time, ByteDance stated these were “old guidelines” that were “no longer in use.”
Even without formal CCP direction, there is a risk that Chinese companies export the PRC’s internal model of censorship out of a natural desire by Chinese firms to avoid “controversial topics” that might rankle CCP overseers. As with Huawei, a Chinese tech company’s direct links to the party-state are beside the point. The latent potential for intervention, data exfiltration, censorship, and information manipulation will exist due to the PRC’s authoritarian political system. While ByteDance can, and is, fighting the U.S. government in American courts, it has no ability to resist an injunction by the Chinese government by appealing to rule of law and an independent judiciary in China. Nor can a Chinese company fight the government in the court of public opinion through a free and open media. Even seemingly innocent platforms like TikTok, whose content largely consists of personal or inconsequential videos, represent a latent risk of information control by the Chinese Communist Party. The emergence of Chinese-owned social media platforms represents a growing threat to the free and open flow of information in democratic societies. Democracies will need to work together to push back against this challenge.
The laws, rules, standards, and norms that govern digital technologies represent the third layer of the digital ecosystem. Similar to hardware and platforms, China has increasingly been exporting its model of authoritarian digital governance abroad through technology, laws, and standards.
Chinese surveillance technology has been exported to at least 80 countries around the world. More troubling than the technology itself, however, is China’s effort to export the rules and norms governing domestic surveillance and media censorship. China has held seminars and training sessions with over 30 countries on cyberspace and information policy. In some cases, such as in Vietnam, restrictive laws mirroring the PRC’s have followed Chinese engagement. While hardware and platforms pose one set of risks, the export of the CCP’s social “software” of laws and policies enabling high-tech authoritarianism poses its own threat to global freedom.
China has also been increasingly active in international standard-setting bodies, attempting to suborn technocratic bodies for political purposes. International standard-setting organisations such as the International Organization for Standardization (ISO), the International Electrotechnical Commission (IEC), and the UN International Telecommunication Union (ITU) are designed to help companies develop common technology standards to ensure interoperability. However, the Chinese government has been increasingly active in recent years in trying to influence these bodies. The Chinese government aims to double down on its emphasis on standards with the forthcoming release of the new government plan “China Standards 2035.” Other countries will need to work together to shore up the governance of international standard-setting bodies, to ensure they remain technocratic institutions that establish standards based on merit, rather than political pressure.
Democracies will be in the strongest position to resist these illiberal trends if they work together, yet democracies do not always agree on how to regulate social media platforms and set standards for digital development. For example, in February 2021 India unexpectedly announced new social media regulations, the Intermediary Guidelines and Digital Media Ethics Code. The new regulations require Facebook, Twitter, and YouTube to appoint India-based compliance officers, who will provide a compliance report every month that details complaints received and what actions the company took to address the complaints. The social media companies must remove content within 36 hours of receiving a legal order from Indian authorities and will be required to reveal the originator of the content. While these new regulations may have some merit, the hurried manner in which they were announced, with little to no warning to the impacted companies, does not bode well. Many observers view the rushed new orders as a response to a recent dispute between the Indian government and Twitter regarding hashtags related to farmer protests that have rocked the government since last fall. Democracies will need to work together to build a common understanding of shared norms for digital governance.
Control over the digital ecosystem is likely to remain in a period of high fluidity. Digital technology continues to rapidly evolve. Even “established” players like Facebook, the largest social media platform in the world, are not very old —Facebook was only opened to the public in 2006. Furthermore, the rapid rise of new entrants such as TikTok suggests that the digital ecosystem remains ripe for continued disruption. Geopolitics is another factor injecting uncertainty into the future of the information environment. As an authoritarian state, China’s rise as a major technology leader is upending the geopolitical order and poses major challenges to an information environment based on liberal values, including respect for human rights and the free flow of information. These challenges are not fading away. China announced in mid-2020 a US$1.4 trillion plan to invest in information technologies, including artificial intelligence, wireless networks, and data centres.
These technological and political forces driving disruption combine to present many possible futures. Some possibilities include:
Global dominance of democratic nations in the global tech ecosystem.
In this scenario, Chinese tech companies remain dominant within China but struggle in the global marketplace. This is currently what is taking place in search and social media and has been the case more broadly in the tech space for the last 20 years. However, this world is receding and seems unlikely.
Chinese-dominated tech ecosystem.
China’s model of state capitalism succeeds in continuing to advance its technological leadership. By 2040, Beijing becomes the global leader in many critical digital technologies. Some democratic states choose to hunker down and cut Chinese technology out of their networks for critical infrastructure, but at significant cost both in terms of increased financial cost and because they must rely on older-model systems.
This also seems unlikely. While China’s capacity for tech innovation should be taken seriously, for China to completely overtake other competitor nations in technological leadership would be a monumental feat. China’s model of state capitalism, while effective, is also highly inefficient. China has done an impressive job of catching up technologically in the past 20 years and can undercut competitors on price through state subsidies (as Huawei has done through $75 billion in state subsidies, for example). However, the Chinese model also has significant shortcomings.
In addition, there are real political trade-offs internally in China between allowing entrepreneurs the freedom to innovate and a desire by CCP leadership to maintain strict control internally. CCP leaders have recently begun to rein in tech leaders, such as Jack Ma, and this is likely to have a stifling effect on tech innovation in China over the long run. A China-dominated global tech ecosystem might gain traction if the PRC undergoes internal reforms that loosen up space for private sector innovation or if democracies fail to successfully innovate on a competing digital ecosystem because they are distracted with internal challenges and/or divided among themselves on a coherent approach.
Bifurcated tech ecosystem. A bifurcated tech ecosystem already exists at the application and platform level within China due to CCP censorship of outside platforms (e.g., Google, Facebook, etc.) and government protectionism and denial of market access. What is new is that Chinese companies are emerging as leading tech competitors on the global stage. It is possible that this could lead to a globally bifurcated tech ecosystem, with some nations using technology from trusted sources and others (most likely developing nations in Africa or South and Southeast Asia) using cheaper Chinese technology without concern about the security consequences. Or in some cases, authoritarian-leaning developing nations might even accept or encourage some of the consequences, such as increased surveillance capabilities for governments. We are certainly seeing elements of this global bifurcation of the tech ecosystem today.
Blended tech ecosystem.
The most likely scenario based on current trends is a blended global tech ecosystem, with different countries dominating in different ways. For example, TikTok (or other Chinese social media platforms) could become a global player alongside Facebook, YouTube, and other established players. Other Chinese tech firms could succeed, as Huawei has done, in going global and owning elements of the digital ecosystem. This scenario, in which the global technology ecosystem would not be neatly bifurcated into democratic and authoritarian spheres but instead be blended together in messy ways, would present a range of supply chain, cybersecurity, censorship, surveillance, governance, and other risks. This scenario also seems like the most likely future trajectory at present.
Shaping a techno-democratic future
To preserve a free and open information environment, democracies will need to work together. Democracies in the Indo-Pacific region have begun cooperation in ensuring secure, reliable, and trustworthy critical technologies. Australia, India, Japan, and the United States have begun working more closely together as part of the Quadrilateral Security Dialogue or “Quad.” Following the first-ever meeting of the leaders of the Quad in mid-March, the four countries issued a Joint Statement announcing, among other things, the establishment of a working group on critical and emerging technologies to facilitate cooperation on international standards and innovation. The working group will also establish mechanisms for the four countries to cooperate on telecommunications deployment and diversification of equipment suppliers through close cooperation with private sector and industry leaders.
Ensuring resilient supply chains for digital and other technologies is an important area of cooperation among Indo-Pacific nations. With growing concerns about relying on Chinese digital technology, there are new efforts to diversify supply chains away from Chinese manufacturers with regard to select critical technologies. In late 2020, Japan, India, and Australia launched the Supply Chain Resilience Initiative to reduce dependency on China. Medical supply chain disruptions during the initial outbreak of COVID-19 last year further reinforced the need for like-minded nations to work together to insulate global supply chains from China.
Indo-Pacific nations can also connect their burgeoning cooperation into broader nascent efforts globally to facilitate cooperation among technology-leading democracies. The UK government’s idea of a “D-10” grouping of the world’s leading democracies, consisting of the G-7 plus Australia, India, and South Korea, is one potential multilateral initiative that could help democracies cooperate on technology policy. Such a global partnership could be a valuable supplement to regional initiatives, such as the Quad, as well as other multilateral arrangements.
While China may be able to spend vast amounts of money to further its technology goals, Australia, India, Japan, the United States and other like-minded nations have the advantage of coalescing around their mutual goals of preserving open, transparent and democratic societies. Together they can leverage their private sectors, civil society organisations, and innovation bases to build a secure digital future.
This paper forms part of the ANU National Security College Future Insights Series, designed to help policymakers develop and test futures scenarios, conduct horizon scanning, and integrate futures analysis into their work. The papers are designed to present provocative conversation-starters and arguable propositions, not definitive trend lists, or predictions about future circumstances. Every paper in the series is informed by consultation, and reviewed by experts.