Chinese Strategy for Global Domination
China has a vision of global dominance is based on four pillars i.e. the BRI, the ambitious Digital Silk Route plan, Made in China 2025 and Chinese Standards 2035. All this gets a force multiplier effect due to Chinese hold over 5G technology and Artificial Intelligence. Using its formidable AI base, 5G is the master stroke that enables the efficient gathering of global data from around the world, which will give cost efficiency to products listed in China 2025 and help China set global standards.
Visualise a four-tier cake – the bottom tier is BRI, the top tier is Chinese Standards 2035 and in between are the Digital Silk Route and Made in China 2025. 5G is the enabler for all, the infrastructural trunk or cake stand on which the cake sits.
Winds of Change
India’s strategic digital pushback against Chinese investments and apps has encouraged like-minded countries like the US, and some in Europe, to follow suit. This is the right time to deflate the biggest Chinese domination tool – 5G, the umbrella under which apps, investments and soon governments could operate.
Each global 5G network sale from China is one additional leg added to the cake stand, supporting and strengthening the multi-tier cake. Without strong legs supporting the cake stand, the four-tier cake will fall to the floor. The repercussions will be twofold: Externally for China’s global economic dominance and loss of bargaining power, while internally it could lead to internal strife and discontent, degrading the social contract of “the better life” for ordinary Chinese.
China is undergoing a strategic, societal and demographic wave of change. The country’s robust economic growth has meant rising wages and expectations by the people of China. Premier Li Keqiang said at a press briefing last month, “There are 600 million impoverished Chinese who live on a monthly income of $161 and they need to be lifted out of poverty.” Higher wages plus an ageing demographic are putting a strain on China’s healthcare systems and budget.
In the last few years issues like deglobalisation, US China trade wars, role of China in delaying information of the virus and consequential global suffering and China’s growing belligerence with ASEAN Countries on boundary issues has generated an atmosphere where China hate is growing the world over.
The strongest leg of the cake-stand which holds the four-tier cake has already been weakened with the US and Japan looking at non-Chinese network equipment suppliers for 5G. European countries like the UK have announced they are relooking at the 5G contracts with Chinese equipment vendors given security vulnerabilities. Vietnam has developed its own version of 5G. The General Court, the second highest court in the EU, overturned the EC’s 2016 decision to block the takeover of O2 by a competitor, paving the way for consolidation of industries across the Union.
In the US, the China-US trade war and now a potential Chinese 5G boycott may change the fortune of debt-laden US telecom companies, which may get spectrum reserved for the defence sector to become competitive and avoid Chinese 5G installations.
India’s Vulnerability
In this scenario, China will do everything in its capacity to muscle twist India to join the 5G negotiations. China may aggressively sue all Indian telecoms for reneging on contracts for current 4G upgradation and future 5G contracts if any, assuming jurisdiction clauses in these contracts are outside in a neutral country. The only way out of this mess can possible if the government bails out our telecom companies.
An already beleaguered Indian telecom sector will have to brace for more economic pain as equipment from non-Chinese companies is more expensive. This can be incentivised by subsidies and tax breaks for patent development in India, enabling it to move from the current hardware-dependent networks to ones that will be software-centric with negligible dependency on the underlying hardware.
D-10 Club
In order to circumvent China, UK is proposing the formation of D-10 club, consisting of G-7 nations plus South Korea, India and Australia. President Donald Trump also talked of expanding G-7 to G-10 to include these countries and it is important for India to play a pro-active role in this. The D10 club is being created for channeling investments into existing telecom companies within the 10 member states, and creating alternative suppliers of 5G equipment and other technologies to avoid relying on China. The silver lining here is the long pending India-EU FTA will get oxygenated.