In this webinar, Professor Gerald Chan spoke on China’s vision of a digital order, how do countries respond to this China challenge and how to live with an increasingly confident and assertive China in a digital world.
REGIONAL STRATEGIC AND POLITICAL STUDIES PROGRAMME WEBINAR
In a webinar organised by the ISEAS – Yusof Ishak Institute, Professor Gerald Chan discussed China’s ambitions to become a high-tech superpower and its visions of a digital order to an audience of 118 from Singapore and abroad. An expert in Chinese international relations and foreign policy, Professor Chan is currently a Professor of Politics and International Relations at the University of Auckland, New Zealand.
Professor Chan first described the rapid change in China’s technological landscape: once seen as a “laggard”, China is now a major power in information technology and aspires to become a cyber-superpower by 2035. The Chinese-organised Global Initiative on Data Security held in September 2020 is a step in this direction. According to Professor Chan, China is seeking to establish certain global cyber-behaviour standards, which in his view includes not stealing data from other countries, respecting the sovereignty of countries over their data and IT industries, and refraining from cyber-espionage.
Currently, China’s digital economy is the world’s second largest after the United States, but it boasts the largest e-commerce market. China is also embarking on a digital currency/electronic payment (DCEP) system, which is now under trial at major cities such as Beijing and Shanghai in preparation for a further launch during the Winter Olympics in February 2022. When fully developed, the digital yuan would enable China to reduce its reliance on the Society for Worldwide Interbank Financial Telecommunications (SWIFT) system, the dominant framework through which cross-border money transfers are carried out. At the moment, the United States has the ability to monitor SWIFT transactions since one of the operations centre is located in the country. With access to real-time SWIFT data, the United States is able to keep an eye on international money transfers, which includes ensuring that its sanctions are being enforced. Out of fear that the United States may one day use this information to strangle the Chinese economy, China has developed the Cross-Border Inter-Bank Payments System (CIPS) as an alternative, although CIPS’ transaction volume currently constitutes only 1-2% of SWIFT’s. The digital yuan, as an electronic currency that can be directly transferred between users, will also provide China with another means of circumventing the SWIFT system.
Since control of industrial standards means effective control of the industry, China is looking to set the standards in order to shape the future digital order. Professor Chan stated that this would facilitate China’s economic and political rise, engendering a positive feedback loop in which its leadership in key technological sectors and industries entrenches its global leadership. In the past, the West has been able to determine industry standards through its ownership of intellectual property and licensing rights. However, for the Fourth Industrial Revolution, China’s Huawei is at the forefront with its 5G and artificial intelligence capabilities. The previous US administration under President Trump has responded by demonising China as a threat and undertaking efforts to contain or decouple from China. The current Biden administration has taken a slightly different tack by “re-globalising” and re-engaging the United States again in various multilateral and global institutions, while also emphasising a domestic programme of infrastructure development.
In sum, Professor Chan suggested China’s vision of a digital order—and its initiatives such as the CIPS and the digital yuan—is part of a broader effort to mould a global order that is not as American-centric or reliant on Western-dominated institutions. However, he described this as a “paced, gradual change” rather than a drastic “paradigm shift” from the current global framework.
Professor Chan also mentioned that ASEAN has the potential to narrow the digital and wealth gap between the Global North and Global South through development cooperation with the organisation’s Plus Three partners of China, Japan and South Korea, a topic he expanded upon during the Q&A session. He also fielded queries relating to the role and impact of other important players in the digital and cyber realms such as Europe and Russia as well as the implications of Chinese tech investments in the Southeast Asian region.