By Sarina Krantzler, ISA Research Associate
This post is the first of two blogs concerning China’s Digital Strategy.
“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in ever battle” -Sun Tzu, The Art of War
In May 2021, China unveiled their updated Five-Year Plan to the world. This plan marks the 14th edition of their socioeconomic, political, and long-range objectives, and has set the tone for a Chinese-dominated supply chain that will be accomplished using antitrust, intellectual property, and standards tools to promote industrial policies.
Their plan poses a grave threat to the US.
Despite this threat, the United States currently does not possess a similar strategic plan to combat China’s advancements or create a sustainably secure cyber system.
China is developing a self-reliant domestic economy supported by a domestic cycle of production, distribution, and consumption. Strategic investments made on behalf of the Chinese government to the technology industry, in the form of annual 7% increases and billion-dollar loans, will move China closer to their goals of technological independence and global influence.
The external aspect of this strategy attempts to secure their supply chains against pressures from the United States.
This portion of the strategy is integrated with China’s largest foreign policy known as the “One Belt One Road Initiative” (BRI), which includes offering critical infrastructure investment to cash-strapped nations and has led to an increasingly complex and prevalent alliance between China and its homegrown internet companies in the construction of their “Digital Silk Road” (DSR).
As articulated in previous blog posts, both the BRI and DSR initiatives have been strategically positioned to facilitate secure trade and gain initial global footholds to accomplish the “Made in China 2025” goal.
Enormous subsidization efforts by the Chinese government, as part of their BRI initiative, allow internet giants such as Huawei and ZTE to conduct sweeping internet infrastructure strategies to secure rights to provide to poor or developing nations. Those providers will be discussed in detail in the following blog.
By embedding Chinese infrastructure in networks around the world, the Chinese government could have the ability to access information traveling across these networks for their own national interests and continue their lucrative intellectual property theft operations.
In President Xi’s April 2020 speech to the Party’s Central Economic and Financial Working Group, he called for building “independent, controllable, secure, and reliable supply chains to ensure industrial and national security…”.
President Xi also stated that China should “use existing global dependencies (on China) as a counterweight to pressures to shift manufacturing out of China” and to “use the pull of China’s markets to attract global resources and deepen global dependence on China”.
Deepening that global dependence occurs through partnerships. China offers critical infrastructure investment to cash-strapped states throughout Asia, Europe, and Latin America with “no strings attached” in their BRI strategy, making their offers irresistible and easy to accept.
Investment from established donors in the West, (i.e., the United States), often arrives with political and economic conditions or demanding reform programs that, although well-intended, make the overall offer less appealing than China’s less-conditional assistance
U.S. relationships are being damaged by China’s no-strings-attached investments to countries unable or unwilling to conform to Western demands. China’s investments attempt to undermine the necessity of participating in the U.S.-led international order by replacing us as a global underwriter of economic development.
For example, Latin America and Greece, both recipients of substantial Chinese investment and trade. Both have displayed a shift away from the U.S. as revealed by voting patterns in the UN General Assembly.
Nations such as Jamaica in the Caribbean region have been targeted by China’s government through donations of security equipment to military and police forces. U.S. Ambassador to Jamaica, Donald Tapia, cautioned the government from installing Huawei and ZTE 5G networks, but Jamaica’s needs for serious infrastructure improvements may not be able to compete with their security priorities.
In 2009, a large China telecom offered a surveillance system to Pakistan which was approved by the Prime Minister but then rejected due to the country’s procurement rules requiring competitive bidding. To site-step the bidding process, a Chinese bank offered to lend them a $124.7 million 20-year loan with a waived 3% interest loan if they won the contract.
China’s determination to achieve global influence adopted a similar yet different strategy in the wake of the COVID-19 pandemic. Instead of infrastructure investment, the Chinese were able to provide Brazil with millions of vaccines.
Of course, that transaction was heavily opposed by Brazil’s government… until the country became desperate with climbing death rates. Then, and only then, was a Chinese telecom company allowed to participate in their 5G auction (originally, they were not invited), and their vaccine gift to Brazil allowed them to secure the contract and expand their reach yet again.
No other country could compete with that deal.
A report issued by the Chair of Senate Foreign Policy Committee, Robert Menendez (D-NJ) in July 2020 said, “The United States is now on the precipice of losing the future of the cyber domain to China. If China continues to perfect the tools for digital authoritarianism and can effectively implement them both domestically and abroad then China, not the United States and its allies will shape the digital environment”.
The U.S. needs to evolve its own creative cybersecurity strategy leveraging strategic goals with economics and public policy to create a sustainable, secure cyber system consistent with Western ethical standards, our free market philosophy, and our democratic traditions.
To our concern, China has even infected parts of the rural U.S. by making sweetheart deals with a wide range of rural telcos to implant China’s 5G technology into our networks. The U.S. strategy to address this (Rip and Replace) will be discussed in greater detail in the following post.
The next blog in the two-part series will provide an overview of the FCC’s Rip and Replace Model and discuss the impact it may have on China’s attempt to spread its influence within U.S. borders, and what it means for our allies who may not be able to follow our lead.