August 1, 2018
Xi Jinping announced the initiative almost five years ago as a way to rebuild the ancient Silk Road, increasing China’s reach throughout Europe, Asia and Africa. Sure, the trillion-dollar-plus initiative involves railways, roads and ports in more than 60 countries. Yet, as China builds infrastructure projects around the world, it’s also exporting technology to those regions. China wants to build telecommunications equipment, infrastructure for the internet of things and smart cities, and e-commerce links in countries it invests in.
State-controlled carriers China Mobile, China Telecom and China Unicom have been been laying optical cables in regions involved in the Belt-and-Road initiative, from Africa to South America. Many places they’re operating in have little digital infrastructure, so there's a huge opportunity to set the standards in those countries. Huawei's push to commercialize 5G technology around the world is closely aligned with the government's objectives. And Inspur, China’s largest server maker, is striking partnerships to provide data centers and fintech-related services in Belt-and-Road countries.
China’s internet giants also stand to gain from this 21st century version of the Silk Road. Alibaba’s goal to eventually serve 2 billion customers fits squarely into Beijing’s plans. The e-commerce giant has been investing in businesses across Southeast Asia, making partnerships in the region to develop e-commerce platforms and build warehouses, as well as developing smart city projects around the world. Ant Financial, China’s fintech giant, has been providing payments services across emerging markets.
So while today’s headlines are focused on trade disputes, the longer-lasting story is how ▶ China is building out its global influence, through trade infrastructure and technology. China wants the countries it invests in to follow its standards on everything from cybersecurity to artificial intelligence to construction, according to Andrew Polk, co-founder of research firm Trivium China. For instance, China is translating its domestic high-speed rail documents into English so they can be exported abroad, Polk said.
Foreign companies "are very focused on the Belt-and-Road initiative because they see the center of gravity shifting. They're competing with China abroad, not just in China anymore," Polk said.
Yet the initiative has run into several roadblocks. Projects have been halted because of the mounting debt countries have to take on and concerns about China's geopolitical expansion. Critics have argued that the Belt-and Road initiative introduces security risks in partner countries, by giving China influence over telecommunication networks and other technologies.
Ultimately, though, the initiative underscores how China is playing the long game when it comes to trade infrastructure and tech. ▶"It's almost entirely about geopolitics," Polk said. "It's all about China making its vision of China taking its rightful place as a major part of the global economy."