The Digital Belt and Road: between sustainable goals and geopolitical competition
The Belt and Road Initiative and the Sustainable Development Goals
China’s Belt and Road Initiative (BRI) is a trillion-dollar investment programme to enhance economic interconnectivity and facilitate development in its close to 100 partner countries across the world. It involves a web of enormous physical infrastructures, such as roads, railways, energy pipelines and ports. Many analysts believe that cross-border business along the BRI is related to the abundance of industrial surplus capacity in China, much of which is heavily polluting.
While the BRI is generally viewed as an opportunity to address the infrastructure gap and boost economic growth, it is not without controversy. China is the largest emitter of greenhouse gases in the world and is responsible for 30% of global carbon emissions. It has plenty of industrial surplus capacity, some of which is polluting and of high energy intensity. Meanwhile, some Chinese-backed projects along the Belt and Road have been exposed to environmental risks, leading international media and NGOs to raise concerns regarding the sustainability of the initiative. With trillions of dollars projected for infrastructure investment in the BRI and with China going all out to integrate its huge market with its partner countries, it is fair to ask how we can make this an opportunity for green transformation in the region. The Chinese government is fully aware of the imperative of “greening” the BRI, highlighted by the release of two government directives in May 2017: The Belt and Road Ecological and Environmental Cooperation Plan and Guidance on Promoting Green Belt and Road. Furthermore, in 2019, the Belt and Road Initiative has been integrated into the United Nations (UN) 2030 Agenda for Sustainable Development (2030 Agenda) to achieve the targeted SDGs.
The SDGs are a combination of goals for human development and environmental sustainability that lately have been increasingly integrated into international trade agreements. Under this newer framework, development is expected to be people-centred and planet-sensitive.[1] China has taken measures to implement the SDGs. One is the International Coalition for Green Development on the Belt and Road, a multi-stakeholder platform convened by the Ministry of Ecology and the Environment. This platform is open to multilateral organizations, government departments, corporations and think tanks from around the world, and has a mission to share good practices and provide policy solutions to sustainable development. Furthermore, China’s rapid developments in its renewable energy industry makes it well-placed to integrate decarbonisation into the Belt and Road Initiative. China is a leader in renewable energy investments, accounting for 36% of total global investment in hydro, 40% in wind and 36% in solar. It also plans to invest $360 billion more into renewables from 2017-2020. China is making leaps and bounds in technological innovation by spending $408.8 billion on research and development in 2015, surpassing the European Union and catching up with the US.
The sustainability of the BRI is being debated globally. What is promising is that new technologies are bringing a digital dimension to conversations about how the Belt and Road Initiative can balance environmental and economic goals.
How can the Digital Belt and Road bring a new green transformation?
In recent years, China has rapidly transformed itself into a global power in the digital economy, as the largest e-commerce market and as a booming innovation centre of similar importance to Silicon Valley. It aims to export its technology and expertise through the Belt and Road with the Digital Belt and Road (DBAR). The DBAR is a programme that was initiated in 2016 by Chinese scientists in cooperation with international. It aims to improve environmental monitoring and data sharing, and to support policymaking. The Chinese Academy of Sciences (CAS) is investing more than 200m yuan (US$32m) in the next five years to support the DBAR programme. According to the Chair of the Programme: environmental and socio-economic information will be shared through a platform for big Earth data, scheduled for roll-out between 2016 and 2026. This open-access gateway will allow researchers, policymakers, and the public to track changes, development, and trends. It will also investigate indices and indicators to feed into the UN’s 2030 Sustainable Development Goals (Guo 2018).
The “Digital Silk Road” (DSR) could potentially bring a green transformation to both infrastructure and economic models in emerging markets.
The Long Run Impact of the Digital Silk Road
Firstly, the Digital Silk Road can play a constructive role in making infrastructure development more viable, efficient, and sustainable in the long run. Indeed, for developing countries lacking critical infrastructures, it is highly valuable to build railroads and power plants. By adding new technologies, the Digital Silk Road will help make the new infrastructure the most competitive and efficient asset possible.
For example, smart sensors and advanced monitoring systems can be integrated into infrastructure to ensure the optimization of resources. Smart grids provide a better way to match supply with demand, so that power plants consume fewer fossil fuels. As an example, for the Jhang power plant in Pakistan, whose generation capacity equals the total power consumption of nearly 4 million Pakistani households, China Machinery Engineering Cooperation worked with Siemens to incorporate two high-efficiency gas turbines.
Advanced Digitalization
Secondly, the Digital Silk Road will bring advanced IT infrastructure to the BRI countries, such as broadband networks, e-commerce hubs and smart cities. The upgraded IT infrastructure can transform their traditional businesses into digital ones and can help scale up new growth sectors – these efforts will generate growth and jobs in fields away from polluting industries. For example, enhancing access to mobile internet creates jobs in rural areas, turning farmers into online vendors. When new channels are created to transport farm produce to cities, every farmer can become an online merchant, as the demand in cities for fresh, safe agricultural products grows rapidly.
One rural entrepreneur only needs to have a 20㎡ space, buy a second-hand computer, and find a basic internet connection to become an online retailer. There are even villages with most farmers working on Alibaba’s shopping site, Taobao - earning them the name of “Taobao villages”. A Taobao village is defined by Alibaba as “a village in which over 10% of households run online stores and village e-commerce revenues exceed 10 million RMB [roughly $1.6 million] per year.” According to Alibaba’s data, there are more than 1,000 Taobao villages in China.
Improvement in Logistical Processes
Thirdly, when more and more medium and small merchants are connected to global trading via digital networks, the Digital Silk Road can also support them with a smart cross-border logistics system. For example, every 11 November (known as Singles’ Day), China’s e-commerce companies host a 24-hour online shopping extravaganza. In 2017, the GMV (Gross Merchandise Value) exceeded $25 billion on Singles’ Day. It was also a global festival, as international buyers and sellers from more than 200 countries and regions got involved. Undoubtedly, the global distribution of so many goods in such a short span of time created a logistical challenge.
When it came to delivery, Alibaba’s logistics affiliate, Cainiao, used artificial intelligence (AI) and a GIS (Geographic Information System) to determine the fastest and most cost-effective delivery routes in a variety of complex road networks, including both rural villages and crowded urban areas. Cainiao used AI to predict what size box should be used to efficiently pack orders consisting of items of various sizes and weights. According to the company’s announcement, its solution reduced the use of packing materials by more than 10%.
Going forward, in the global context, companies could all install digital warehouse and inventory management systems to save costs and resources on shipments. New digital technologies, such as low-cost satellites accessed by handheld smart devices, could provide real-time supply chain visibility to merchants, so they know when a shipment will arrive and can plan operations in advance. This frictionless method of conducting business with a reduced focus on expanding physical infrastructures can enable more businesses and entrepreneurs to participate in global trade.
Solving Environmental Challenges Through Big Data
Fourthly, the Digital Silk Road promotes sustainable development through the harnessing and application of big data to directly solve environmental challenges. For example, smart use of big data could enable African countries to better respond to water security issues, climate change, and natural disasters. A body named the Digital Belt and Road has reportedly set up a $32 million programme, involving experts from 19 countries and seven international organizations, to tackle such challenges together with natural disaster risks and natural heritage protection.
Improvement in Custom Procedures
Fifthly, one of the biggest challenges facing the land routes that make up the Belt and Road Initiative are delays, often induced by lengthy custom procedures, security checks, and having to change trains to meet differing rail gauge standards. Professor Richard Griffiths, author of “Revitalising the Silk Road”, estimates that up to 80 percent of the journey time from China to Europe by rail is made up by delays. Reducing this red tape can result in rapid improvements as it happened in 2012, when a custom union between Belarus, Kazakhstan, and Russia cut the journey time from China to Europe by around 5 days. Automation of custom procedures through DSR IT projects could greatly decrease the time a European or Chinese customer must wait for goods. Such solutions are already being piloted in Malaysia, which together with China’s Alibaba launched a Digital Free Trade Zone. This electronic world trade platform aims to assist small and medium sized companies in finding trading partners, managing cargo authorization, and smoothly navigate the customs process.
Internet Access Equality & Data Sharing Concerns
Finally, the Digital Silk Road is critically important for a sustainable global economy because it helps to address one of the most fundamental challenges of the Fourth Industrial Revolution: providing basic internet access for more than 3 billion people, roughly half the world’s population, who still have no internet connectivity. While the digital economy is booming globally, the failure to narrow the digital divide could slow socioeconomic mobility and harden differences between the world’s haves and have-nots.
Through increased connectivity from the Digital Silk Road, emerging companies and markets will generate basic data from their businesses and operations, which, as it matures and gets structured, could become big data on, for example, their product supply and demand dynamics, and the history of prices and their trends. By going digital, small and medium enterprises (SMEs) can make more agile adjustments to improve their operations, develop new services and upgrade their business models for greater success.
To summarise, the DSR offers opportunities to make the Belt and Road Initiative more efficient and more sustainable. Yet, it will undoubtedly come with its concerns, as foreign participants become wary of the data practices adopted by Chinese firms. In the last years, the world has been captivated by the extraction of personal data for political usage by Cambridge Analytica. The usage of data in this manner has shocked millions of people; however, in the case of China’s IT giants such as WeChat (Tencent), the links with the Chinese government and its data sharing policies are openly confirmed.
In 2015 EU and China signed a milestone agreement to develop 5G networks through the joint declaration which was signed by Gunther Oettinger and Miao Wei. However, in 2020, an increasing number of nations banned or eliminated the Chinese supplier from their 5G build-out, demonstrating their lack of faith in China. For instance, France ordered a phase out of the tech company’s equipment from their 5G networks. Sweden and Germany banned Huawei and ZTE from its 5G networks. Slovakia, Bulgaria, Romania, Poland, Estonia, Latvia, Czech Republic and Slovenia have made joint statements on 5G cooperation with the U.S.
Clearly the America's global drive to prevent Huawei technologies from expanding finds some of its closest supporters in Europe. The fundamental concern of the U.S officials is, that if Europe transmits data on networks using the Huawei equipment it would offer to Beijing an easy access to multiple sensitive information. Due to this behaviour, China has threatened to limit imports from nations that prohibit the operation of the tech company. It all boils down to what EU member states value the most as the consequence of their decision, either access to the $12 Trillion Chinese economy or America’s security.
Hence, we should expect the DSR to become a focus lens of debates surrounding the BRI as it simultaneously offers the greatest opportunities and causes the largest doubts.
Geopolitical implications of the DSR: the strategic hotspot of the Red Sea
In addition to concerns about national security, the DSR has immense geopolitical implications as the digital economy requires a network of fibre optic cables that transits through many different countries. One example is of the Red Sea, which has strategic importance since it represents 10% of the world trade and 40% of the trade between the Far East and Europe. European countries, but also North Africa and the major Asian economic and trade poles such as China, India, Japan, and South Korea, all depend heavily on this jugular for their trade in raw materials. The remotely far US may appear unaffected, but actually up to 50 American military ships pass annually on the way to the disputed Asian seas. The Red Sea is a strategic location for two bottlenecks that delimit it: the Suez to the North and the Strait of Bab Al Mandab to the South. In particular, the Strait of Bab Al Mandab is a gateway to the Gulf of Aden and further to the Arabian Sea. But the geostrategic centrality of this semi-closed sea is not limited to the surface.
To date there is no fully terrestrial fibre optic cable that crosses the Arabian Peninsula. All the data traffic between Europe and Asia passes through the Caucasus and Iran using the Europe-Persia Express Gateway. Alternatively, it is channelled into the much more congested ridges passing through the Red Sea and Egypt. The latter is a fundamental hub of the global internet, a crossroads of data from and to Asia, Africa, and the Middle East: the 15 fibre optic cables that cross it linking the Mediterranean and the Red Sea serve, depending on the time periods, between 17% and 30% of global data traffic, equivalent to a catchment between 1.3 and 2.3 billion people.
Egypt is a point of emergence of cables which run in large part towards the sea: not without logistical risks, as in points of lower depth these can be torn by anchors or other equipment, and also sabotaged purposefully. However, the cables are not protected from espionage. In this respect, Cairo would enjoy and enviable geographical advantage, but its perceived unreliability excludes it from the main cooperation schemes in the field, such as that of the Five Eyes.
Conclusion
China's Belt and Road Initiative aims to bridge the infrastructure gap throughout the world and promote sustainable global economic growth. Together with the BRI, China's tremendous technological advancements can assist nations in resolving pressing infrastructure issues in a cost-effective, environmentally friendly, and highly competitive manner. Secondly, it will generate growth and jobs through transforming the traditional business into digital ones and all kind of procedures and logistical operations will both see considerable improvements. China is continually developing its own, more secure trade routes, foster economic interdependence between itself and the participating nations, towards an increase in Chinese global political and economic dominance.
Although, the digital impact of the BRI offers tremendous opportunities for the world it undoubtedly comes with many concerns. China’s aim to export some of its technology and experience through the Belt and Road has raised a political conflict with the U.S regarding the implementation of Huawei’s 5G network in Europe along with a fear of an alteration in the commercial relationship between the EU and China’s trillion dollar market.