Published Twice a Month
February 16, 2019 – February 27, 2019
Centre on Asia and Globalisation
Lee Kuan Yew School of Public Policy
India: Integrating with China’s Digital Silk Road?
By Archana Atmakuri and Chan Jia Hao
Image from Max Pixel
More often than not, New Delhi and Beijing relations are viewed through a competitive lens. However, a deeper look into the relationship reveals aspects of cooperation, particularly in the area of technology. The year 2018 experienced the rise of artificial intelligence (AI), 5th Generation (5G) mobile technology, and digital infrastructure around the world. However, with the rise of such emerging technologies, governments began to implement greater restraints on their spread, starting with the United States’ (US) proposal to establish sweeping export controls over a range of ‘emerging and foundational technologies’. This was followed by similar proposals in the European Union (EU).
Tensions grew within the international community in December 2018 when the global chief financial officer of Huawei Technologies, Meng Wanzhou, was arrested in Canada at the request of US authorities. While initially accused of violatingsanctions against Iran, scrutiny on Meng’s case intensified when the US accused Huawei of intellectual property theft. A number of countries, including the United Kingdom, Japan, Australia, New Zealand and Canada swiftly ordered reviews of the Shenzhen headquartered company’s 5G technologies in their respective countries, citing national security concerns.
India, however, was the exception.
It placed no ban on Huawei and has continued to expand its technological transfers with China. This is despite the fact that India has been one of the fiercest opponents of China’s cross-regional Belt and Road Initiative (BRI).
China’s aspiration to be a leader in digital technology was reflected first in its Digital Silk Road roadmap in March 2015. This came after the official announcement of the ‘One Belt One Road’ in 2013 - later known as the BRI. An ‘Information Silk Road’ was first introduced as one of the sub-goals of connectivity. The concept further developed in July 2015, at the China-European Union digital cooperation forum, seen as parallel to the BRI. The digital silk road proposed that since China held a competitive advantage over other countries in its 4G and 5G network standards, Chinese companies could expand cooperation with these countries to fully develop their digital economy.
This opens up opportunities for countries like India to catch up with technological advancements. According to a report which quoted experts from the UK speed tester OpenSignal, India’s average download speeds are much slower than that of its neighbours Sri Lanka, Pakistan and even Myanmar, perhaps due to the “rapid growth in mobile penetration and new users connecting to mobile networks.”
While China and the US have been racing towards launching 5G technologies, India has been struggling to stabilize 4G technology. India needs to bridge the financial gap to expedite its technological developments. In April 2018, it was reported that China had invested over $8 billion in India, a large part of which went into the Information and Communication Technology (ICT) sector. Moreover, the spokesperson for China’s Ministry of Commerce, Gao Feng, remarked how “India has become an important market for infrastructure cooperation among Chinese companies and a major investment destination”.
Indeed, there are many signs of deepening China-India cooperation in digital technology.
First, Indian and Chinese start-ups are taking steps to establish closer linkages for cooperation with officials at ministerial levels. For instance, in 2018, around 20 Indian start-ups and 150 Chinese investors participated in the Indian government’s first start-up event in Beijing, which was jointly organised by the Start-up India Association, Venture Gurukool, and Sino Global Capital.
Second, tech companies in both Asian countries have been building up substantial partnerships. Between 2015 and 2017, Alibaba Group invested at least US$ 620 million collectively inSnapdeal, Big Basket, Ticket New and One 97. Similarly, Tencent has invested over US$1.2 billion in Flipkart, Pepo, Byjiu’s classes, Ibibo Group, Hike andPracto.
At the back of its technology sector value chain, India has also seen an increasing number of Chinese firms establishing themselves in various parts of the country. For instance, China’s Xiaomi Corp’s component supplier, Holitech Technology, is reportedly set toinvest about $200 million over three years to set up a plant in the Indian state of Andhra Pradesh which would create about 50,000 jobs. Similarly, in Greater Noida, Chinese smartphone maker Vivo Mobile’snew plant is expected to create about 5,000 jobs.
Third, Chinese smartphone companies are taking over Indian markets. More than half of the total smartphones sales in India are now dominated by four major Chinese companies - Xiaomi, Oppo, Vivo and Honor. In 2018, India reportedlyspent over Rs 50,000 crore (approximately US $6 billion) on smartphones – almost double compared to the previous financial year. Chinese phones clearly dominated the 4G arena, leaving their Indian competitors behind.
However, the increasing prevalence of Chinese technology has also caused concern among Indian policymakers. In 2013, India’s Department of Telecommunications (DOT) established the testing of spyware and bugging software in telecommunication kits from Huawei and ZTE. In December 2018, India’s Telecom Equipment and Export Promotion Council (TEPC) called on National Security Advisor, Ajit Doval, toban equipment purchases from Chinese companies like Huawei, ZTE and Fiberhome, citing security concerns. These have occurred alongside India’s continued refusal to support China’s BRI on security grounds.
Yet India is unlikely to join the developed countries in their quest to curb Huawei and other Chinese tech companies precisely due to the allure of continued technological transfers benefitting India. Just last month, the Indian Minister of Communications Manoj Sinha said that there has beenno proposal to ban telecom equipment produced by Huawei. The Cellular Operators Association of India (COAI), the telecom industry association, has also urged DOT to allow Huawei to assist local operators to build up the industry’s 5G capabilities so long as they remain fully compliant with government requirements. Despite domestic competition and national security factoring into India’s opposition of China’s BRI, a deeper look into the digital technology sphere reflects a significant level of complexity and nuance in India’s China policy.
India, in an attempt to upgrade its technology, has bolstered its relationship with China, particularly in telecommunications and digital technology. Despite perceptions of competition, China-India synergy in digital technology shows there is great potential for cooperation in their relations. Besides, China’s ‘digital infrastructure deals’ with India are not very different from digital technology projects in other countries. The only distinguishing factor here is the absence of Silk Road connectivity projects. Chinese technological transfers will continue to benefit India alongside the rest of South Asia, and hence digital technology cooperation will remain a persistent feature of cooperation with China.
Archana Atmakuri is a Research Analyst at the Institute of South Asian Studies (ISAS), National University of Singapore (NUS). Her research focuses on India-China relations and China’s rise.
Chan Jia Hao is a Research Analyst at the Institute of South Asian Studies (ISAS), National University of Singapore (NUS). In an increasingly digitalised world, Jia Hao’s research focuses on the relevant linkages between technology, governance and economic policy among South and Southeast Asian countries.
The views expressed in the article are solely those of the author and do not necessarily reflect the position or policy of the Lee Kuan Yew School of Public Policy or the National University of Singapore.
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In a press statement, the UNSC, which comprises of 15 nations including China, condemned the Pakistan-based terror group headed by Masood Azhar for its “heinous and cowardly” terror attack.
UK's Hammond: talk of warship deployment complicates China ties
Reuters, February 21
Britain’s talk of deploying a warship in the Pacific has complicated its relationship with China, finance minister Philip Hammond said.
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Bloomberg, February 20
China is barring foreign travelers from Tibet over a period of several weeks that includes a pair of sensitive political anniversaries questioning the legitimacy of Beijing's rule over the Himalayan region.
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Trade and Economy
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Livemint, February 24
The market for 5G, the next generation wireless technology, in India will be huge and second only to China from an overall industry perspective in the next 10 years, James Wu, President, South-east Asia, Huawei said on Sunday (February 24).
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The Economic Times, February 23
“China is right in thinking it is successful because data is the key ingredient. Data in China will be like oil in Saudi Arabia,” Hermelin said at the Global Business Summit. “India can compete with China in terms of data as it (India) is a large country with a large population,” Capgemini chairman Paul Hermelin said on Friday (February 22).
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The Indian Express, February 19
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Energy and Environment
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CGTN, February 26
China's marine geological survey vessel Haiyang Dizhi-10 has successfully completed a joint expedition with Pakistani scientists in the Indian Ocean.
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Gulf Times, February 21
India and China will drive the natural gas market until 2040, International Energy Forum (IEF) secretary general Dr Sun Xiansheng said even as he underlined natural gas’s “critical role in achieving sustainable and inclusive growth”.
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Xinhua, February 17
Major Chinese cities saw worsening air quality in January, according to the Ministry of Ecology and Environment (MEE). The share of average good air quality days for China's 337 cities monitored by the ministry stood at 67.6 percent for the first month of this year, down 3.5 percentage points year on year.
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The Interpreter, February 27
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By Sushant Sareen, Senior Fellow at Observer Research Foundation (ORF).
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South China Morning Post, February 20
By Rupakjyoti Borah, Visiting Research Fellow, Institute of South Asian Studies (ISAS), National University of Singapore (NUS)
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CGTN, February 18
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Global Times, February 17
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Books and Journals
China-India Rivalry at Sea: Capability, trends and challenges
Asian Security 15, no. 1 (2019)
Koh Swee Lean Collin is a Research Fellow with the Maritime Security Programme, at the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University, Singapore (NTU).
The Sino-Indian rivalry features an increasingly prominent maritime dimension amidst the countries’ naval buildups and deployments in the Indian Ocean Region (IOR) and Western Pacific. This study finds that the patterns of naval buildup and nature of the seas as an ambiguous, international medium do not necessarily shape mutual perceptions between China and India as pure security seekers. India’s concerns about China’s IOR forays revolve around its expanding bluewater naval capabilities, especially submarines, and port access. Beijing is wary of New Delhi’s reach into the Western Pacific and role within a perceived US-led containment scheme that allows it to leverage on partners’ bluewater assets. While war remains a remote prospect, this Sino-Indian rivalry at sea – extending from unresolved terrestrial political problems – looks set to persist.
Compiled and sent to you by Centre on Asia and Globalisation and the Lee Kuan Yew School of Public Policy, National University of Singapore.
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