What’s Behind the Worries About Chinese Tech?

The Western world has become increasingly concerned about digital security, with a particular focus on China. However, security is simply the tip of the iceberg, and below lies issues of power and money; cyber security is really about cyber politics and cyber economics. 

A few decades ago, China became the world’s factory, developing its economy using cheap labour and a wealth of natural resources. The trade-off for cheap, innovative products has been a reduction in security. As standards became globalised, imports were less closely monitored. 

However, China has now reached the stage of being an affluent country with a thriving middle class. In fact, they are now the largest single market in the world, making China less interested in the global economy. Prices are rising and China is starting to dominate both economically and technologically. Feeling threatened, the Western world is seeking greater protection of its economy and technology.

It is unlikely that we’ll return to the protectionist policies of the early 20th century, we will see a greater bifurcation of technology. We are already seeing it when it comes to things like semiconductors and applications ─ there is one set of technologies operating in the West, one in China, another in Russia, and so on.

Innovation will slow

The world moves in big cycles, shifting back and forth between protectionism and globalisation. In the coming, more protected, cycle, consumers will still enjoy a lot of the benefits of technology but things like 6G will take longer to roll out and likely cost much more.

The growing bifurcation of technologies and protection of national interests will likely lead to a slowing of innovation. We are already seeing tech giants cutting jobs in anticipation of things slowing down, readjusting the levels of investment that delivered the tech boom of the past two decades.

And with China no longer serving as the world’s factory, products will also become more expensive. Shifting manufacturing out of China will likely cause a lot of friction and disruption of supply chains in the near future. In the longer term, however, this shift may help rebalance job creation and wealth distribution, especially in developing regions like Africa.

The good news is that the learnings and development will still be shared; the global market won’t be closed just yet. Rather, organisations, like the Mobile Ecosystem Forum (MEF), will step in to become facilitators of collaboration and development, helping manufacturers, software engineers and application developers work closely together to create technologies that work seamlessly across different regions, networks and devices.

Control of standards

Aligned global standards have helped technology work seamlessly over the past few decades, ensuring that development and innovation have remained open yet still relatively secure. Interestingly, China has been careful to keep itself removed from these global standards while still using them to manufacture technology.  As China stops playing manufacturer and grows into a large, mature market, the rest of the world has come to recognise the power that this separation has allowed the Chinese government. In its internal market, China can control technologies, social media platforms, applications, and information centrally – something the global West is ideologically opposed to.

Yet, as technology companies have grown, so too has the need to gain some level of control over how technologies and information are used. If Facebook is bigger than any individual country and there is no control over how they use data, they have the potential to become incredibly powerful, as illustrated by the Cambridge Analytica scandal.

As a result, the EU and US are now going down a path of trying to control various internet players. The pushback has come in the form of decentralised Web 3.0 which provides new de facto standards. Concerned about sovereignty and security, national governments are trying to reign in Web 3.0 technologies and/or create their own.

It also seems that the EU is challenging the dominance of US-based tech giants by developing its own standards, such as the Digital Markets Act (DMA) and the Digital Services Act (DSA), to try to gain greater control and regulation of digital markets and services. It will be interesting to see whether Web 3.0 will become Chinese vs the rest of the world or whether there will be a more granular differentiation of digital standards.

Cyber security is more visible at the moment, partly due to things like spy balloons and Huawei being designated “high risk” in the UK and US (among others). Over the next decade, we will see cyber concerns change the global political and economic status quo.

Dario Betti is the CEO of  Mobile Ecosystem Forum, a global trade body established in 2000 and headquartered in the UK with members across the world.