O grande jogo digital
The Digital Great Game
This Strategic Comment was originally published in November 2020.
The United States and China appear to believe that digital dominance will bring broader geopolitical and economic power in the coming decades. While the US has made increasingly robust efforts to counter China’s moves in what has been described as a ‘Digital Great Game’, it is possible that the current tactics of both sides may prove counterproductive.
Life in the twenty-first century depends upon a virtual world. This world is where humans communicate, learn, play, shop, bank, make friends and perhaps meet their future spouses. It underpins the ‘critical national infrastructure’ of states – their agriculture, food distribution, banking, healthcare, transport, water supply and energy – and their interactions with their citizens. It is fundamental to the global economy, to international security and influence, and to the global spread of ideas. It is also used by criminals to defraud, terrorists to radicalise, and by states to spy and to seek strategic advantage over their adversaries. Some argue that future wars will be won or lost in this domain. While each of these activities has a parallel real-world dimension, activities in the virtual world add a revolutionary degree of speed, scale and geographic reach. This virtual world has many shorthand descriptors, some of which are more accurate than others: ‘cyberspace’, ‘the internet’, ‘the web’, or ‘the online or digital environment’.
This virtual world in turn rests upon physical foundations or hardware: computers, microchips, phones, servers, switches, data centres, fibre-optic cables, cellular radio towers and antennae, and communications satellites. Across this hardware run coded software applications (such as Facebook or TikTok). Both hardware and software can be categorised as ‘digital technology’. Some have argued that a ‘fourth industrial revolution’ is already under way, characterised by the use of digital technology to enable the growing automation of human activity.
The United States has so far been the global leader in digital technology, but China has taken measures over the past two decades both to insulate itself from perceived threats from US technological dominance and to increase its own digital influence worldwide. Washington and Beijing appear to believe that digital dominance will bring broader geopolitical and economic power. While the US has made increasingly robust efforts to counter China’s moves in what has been described as a ‘Digital Great Game’, it is possible that the current tactics of both sides may prove counterproductive.
Digital dominance
The contemporary structure and governance of the global internet reflects a balance between the interests of multiple companies and governments, the visionary coders who created it and its everyday users. It is therefore ‘multi-stakeholder’ and embodies the principle of ‘internet freedom’. Since the internet’s inception, however, US technical innovators, companies and national interests have dominated the development of the digital technology that underpins it.
The US is the world’s only digital superpower. Fifteen of the world’s top-50 digital-technology companies (excluding fintech and e-commerce firms) are American, while most of the others are based in states closely allied to the US: Japan has ten, Western Europe eight, Taiwan six, South Korea two and Mexico one; the remaining eight are Chinese. The US was the first state to develop national strategies and military doctrine around the use of ‘cyber power’. The US has developed the world’s largest commercial sector devoted to cyber security. Leaks over the last decade have revealed the strength of US cyber-intelligence capabilities, including how they exploit US commercial dominance in digital technology.
‘The US is the world’s only digital superpower.’
Most other states have recognised their dependency on digital technology for their future prosperity and security. None more so than China, especially as its regional and wider aspirations have brought it increasingly into competition with the US. Beijing believes it cannot meet those aspirations in today’s digital-dependent world if it is not itself a digital power. The ruling Chinese Communist Party (CCP) also recognises the ideological threat posed to it by the Chinese people’s use of digital technology, given the internet’s crucial role in the spread of ideas.
China's response
China’s response to US digital dominance has focused mainly on mitigating its own internal risks. Since 2000, China’s leaders and diplomats have argued (at first in private, but later at the United Nations) for ‘cyber sovereignty’: the principle that states should have greater control over their ‘sovereign’ cyberspace. To this end, it has implemented its ‘Golden Shield Project’, using digital technology for large-scale, intrusive surveillance of its own population, most notoriously against the Uighurs in Xinjiang province. It has also banned certain US software applications (including Facebook, YouTube and Twitter) for failing to comply with Chinese censorship laws. This collection of measures is often summarised as the ‘Great Firewall of China’.
China also considers its dependency on foreign suppliers for the core digital technology upon which it relies to be a major threat. Its ‘Made in China 2025’ strategy, published in 2015, aims to produce 70% of such technology indigenously by 2025, and for China to be a world leader in this technology by 2030. China has made the production of computer microchips (or semiconductors), which play a critical role in most hardware, one of its top priorities (along with artificial intelligence and quantum computing).
Five years on from the announcement of the Made in China strategy, however, China continues to rely significantly on eight US companies for the provision of its digital technology. Chinese observers have called these firms – Apple, Cisco, Google, IBM, Intel, Microsoft, Oracle and Qualcomm – ‘the eight guardian warriors’. For example, Microsoft employs 6,000 people in China, and its Windows operating systems are used widely, including by the Chinese armed forces. China’s microchip imports have not decreased – by 2015 they exceeded US$200 billion; since 2018 they have exceeded US$300bn. Today, only 15% of microchips used in China are made there, and a significant proportion of those are produced by foreign companies operating in China. Chinese firms are leaders in some aspects of artificial intelligence, especially concerning facial recognition, but otherwise lag far behind Google and Microsoft. The story is similar for quantum computing. Despite its own significant investment, China has continued to rely heavily on Western research and development into new, groundbreaking digital technologies, often through investment in or collaboration with Western firms and universities.
China has sought to mitigate its perceived technological vulnerabilities in various ways. It has involved US companies in its internal cyber-security governance, including for national technical standards, allowing it some oversight of the use of US technology in its networks. The state-owned commercial Bank of China is collaborating with IBM on digital innovations for the finance industry, and Microsoft’s attempts to enter China’s cloud-computing market are conditional on a Chinese company’s operating the core data centres (a similar arrangement to that envisaged in the United Kingdom’s original decision to include Huawei equipment in its 5G mobile networks).
‘China continues to rely significantly on eight US companies for the provision of its digital technology.’
Beyond its borders, China has used digital technology aggressively to further its strategic goals. To expedite its economic development, it has conducted cyber operations to steal intellectual property from other states on an industrial scale. It has developed its own military cyber doctrine, and President Xi Jinping has sought to promote indigenous digital innovation, declaring that China will become a ‘cyber superpower’.
Chinese digital-technology companies have increased their share of global markets: Huawei has become a world leader in 5G technology and smartphones; Chinese company Lenovo competes with US company HP for leadership of the worldwide personal-computing market with an increasing US market share; the use of Chinese software applications (QQ, WeChat, TikTok) is growing worldwide; Tencent has invested heavily in US videogame companies; and Alibaba has become a major provider of cloud systems in Asia. China is seeking to use the ‘Digital Silk Road’ component of its Belt and Road Initiative to exploit the emerging digital markets of the developing world. Chinese companies also enjoy the advantage of a vast domestic market, containing 1bn of the world’s estimated 4.5bn internet users.
The Digital Great Game
While digital competition between Washington and Beijing has been evident since the early 2000s, US tactics have become more robust since 2017–18, featuring increasingly overt attempts to stop the spread of Chinese digital technology. Most prominently, Washington has sought to undermine Huawei’s attempts to supply 5G technology worldwide by exploiting US dominance of global microchip production. In 2019, Washington restricted Huawei’s access to US-made microchips and, in the summer of 2020, banned foreign firms dependent on US technology from selling their microchips to Huawei. This tactic made, for example, the UK’s original decision to retain Huawei equipment in the non-core parts of its networks unviable: the Huawei equipment would no longer include top-of-the-range US microchip technology, and the UK would no longer be able to use such technology to scrutinise Huawei’s code at the joint UK/Huawei facility in Banbury. The US is considering using similar tactics against Chinese providers of undersea fibre-optic cables and cloud data storage.
Washington’s efforts against TikTok, which is owned by the Chinese company ByteDance, are particularly revealing. Unlike the Huawei case, which focused on hardware, TikTok is a software application (mainly used to create light-hearted short videos), with its potential use for ‘misinformation’ signalled by the US as the main security risk. The Trump administration’s threat to ban TikTok is therefore somewhat reminiscent of Chinese demands for cyber sovereignty, with the US Department of State’s ‘Clean Network’ programme echoing the Chinese Great Firewall. It also ignores TikTok’s international characteristics: user data is stored in the US and Singapore, not China; it is run by American managers based in the US; its CEO was a veteran US Disney executive until the ban; while even TikTok’s chief security officer is a US national. Furthermore, TikTok removed its application from Hong Kong after the imposition of the new security law there (quicker than Facebook and Google) and, unlike some Chinese companies, it is untainted by any alleged complicity in surveillance in Xinjiang or by any association with the Chinese armed forces. These factors, together with the distance between TikTok’s typical user base and any critical national infrastructure, make the overall cyber-security risk relatively low.
Recent US actions against Huawei and TikTok suggest that the US and China are contesting the future of cyberspace in the belief that digital dominance will bring long-term strategic and economic advantages. Some argue that this contest could lead to a bifurcation of the internet (the so-called ‘splinternet’) and that a digital ‘iron curtain’ might descend between two digital superpower blocs. Another analogy might be with the ‘Great Game’ between the British and Russian empires in Central Asia during the nineteenth century. Like the original Great Game, the twenty-first century digital contest involves two economically connected major powers, contesting an unexplored, continually shifting space, marked by fluid commercial and security alliances. As the British and Russians aimed to spread their respective influence throughout Central Asia through physical exploration and trade, so the US and China hope to spread their influence globally through advances in, and export of, digital hardware and software. The tactics employed include the seizure of digital territory, enabled by digital siege and blockade. For example, the US used its dominance of microchip technology to ‘blockade’ Huawei, undermining the company’s leading position on 5G technology and smartphones, potentially even putting it out of business. Countries other than the US and China face the hard reality that, at present, they are perhaps the latter-day equivalents of Bukhara, Khiva and Merv: merely left to choose to which power they will be digitally beholden. Both Washington and Beijing seem to consider each other’s companies as latter-day equivalents of Britain’s East India Company: commercial fronts for the strategic ambitions of their parent state. That is how Beijing, not unreasonably, views the eight guardian warriors and the Trump administration views Huawei.
Yet the tactics that Washington and Beijing are employing could prove counterproductive to both. Chinese attempts to indigenise its development of core digital technology, including by wholesale theft of foreign intellectual property, are proving antagonistic, expensive and unrealistic. They have prompted US efforts to isolate China from the world’s most advanced digital technology. US attempts to close certain markets to Chinese companies could rebound – US microchip manufacturers are already complaining that the Trump administration’s tactics are denying them the lucrative Chinese market – while China’s retaliatory options are many (for example, the US produces only 5% of the world’s circuit boards, into which microchips are fitted, compared with China’s 45%). Leaders in both countries may have failed to appreciate the true lesson of their recent attempts to control or nationalise the use or production of microchips – the complex, entangled, globalised nature of digital technologies, each with often opaque, multinational supply chains. Given this complexity, it is easy for a player in the Game to make a move that causes it (or its allies) unintended harm. For the US, its best prospects for continued digital dominance may depend upon this digital entanglement and on its long-held principle of internet freedom.
‘Chinese attempts to indigenise its development of core digital technology, including by wholesale theft of foreign intellectual property, are proving antagonistic, expensive and unrealistic.’
The US ban on TikTok appears to be an attempt to punish a Chinese company that had already recognised that, to succeed internationally, it had to demonstrate its independence from the Chinese state, internationalise its board, be transparent about its data handling, and address the ethical and human-rights concerns of its international stakeholders. Yet the TikTok case also demonstrates that it is not impossible for a Chinese company to reform in the pursuit of commercial advantage. If other emerging Chinese companies were required to meet a range of standards concerning governance and transparency in order to list on foreign stock exchanges, this might go some way towards assuaging international concerns. Furthermore, firsthand accounts of China’s Pearl River Delta paint a picture of a multitude of Chinese start-ups in an atmosphere of innovation and competition similar to that of Silicon Valley, and viewed as ‘out of control’ by Beijing, in much the same way Washington views Amazon, Apple, Facebook and Google. It may better suit US strategy to use tactics that might encourage rather than stifle the development of such a counterculture in China.
Outlook
The US and China appear justified in identifying digital technology as a crucial battleground for global economic and strategic dominance, and in identifying each other as their primary digital adversary. This is likely to remain the US view. Washington’s current digital dominance has greatly benefitted from the globally entangled nature of digital technology. Yet it is likely that the current tactics employed against Huawei and TikTok will deprive US firms of large Chinese markets; incentivise and add momentum to Xi’s Made in China 2025 ambition, even if its deadline will slip (Chinese rhetoric now describes this as the ‘Digital Long March’); incentivise increased exports of China’s technology and its model of cyber sovereignty to the developing world in an effort to compensate for lost Western markets, potentially narrowing US market share there too and globally undermining liberal values of unrestricted information exchange; and drive Chinese companies into – or further into – the CCP’s embrace. While Beijing may currently be intent on pursuing digital autarky, it may also be strategically unwise for Washington to reinforce the perceived merits of doing so. It remains possible that the commercial interests of the larger US digital firms, and of the wider US economy, will be voiced loudly enough to drive a change in Washington’s tactics.
The states and firms caught up in the US–Chinese competition in the Digital Great Game may try to persuade any future US administration of the merits of changing tactics. It also seems likely that they will advance other measures to increase their own room for manoeuvre. This might include incentivising the development of greater diversity in the supply chain for digital technology through targeted national investments. Japanese tax breaks for any of its companies building 5G technology are one example of this; British proposals to use an alliance of ten nations – the so-called ‘D10’, composed of the G7 plus Australia, India and South Korea – to build future digital technology are another. More generally, better use might be made of international technical standards and patents to ensure that future generations of digital technology – such as 6G mobile networks or artificial intelligence – are designed and built with security and privacy as integral features. This process could include standards for the quality and transparency of coding, algorithms and data storage, allowing for ease of auditing, with the aim of reducing the technology provider’s nationality as a direct security factor.
Editor: Benjamin Rhode
Fonte: IISS, em Novembro de 2020
https://www.iiss.org/publications/strategic-comments/2020/digital-great-game?_cldee=aWYuc2ludHJhQHNhcG8ucHQ%3d&recipientid=contact-f3612162f136ea1191160050560310e7-75e94d52a584488fbaafd6602ac35cd5&esid=fe930ce5-eb1d-eb11-a813-000d3a7f128d