The interplay between China, the US, and India

As China rises, racing ahead in emerging technologies, there are implications for both Washington and Delhi

The world today stands at the cusp of a new industrial revolution. Driving the revolution are several emerging technologies like 5G, artificial intelligence (AI), Internet of Things (IoT), cloud computing, 3D printing, robotics, autonomous systems and blockchain, all of which are fuelled by data.

Physical, social and physiological lives of human beings and societies are being rapidly digitalised. Global Internet Protocol traffic was 100 GB per day in 1992 when the Internet was born, it reached 100 GB per second by 2002, and continued its exponential growth to cross 46,000 GB per second in 2017. According to the United Nations Conference on Trade and Development’s Digital Economy Report (2019), it is expected to cross 150,000 GB per second by 2022.

Digital growth is highly uneven, with the United States (US) accounting for 68% of the market capitalisation value of the world’s 70 largest digital platforms and China following with 22%. The rest of Asia accounts for 5%, and Europe, only 3.6%. The US and Chinese dominance are clear, as these two cater for over 75% of the cloud computing market and 50% of global spending on IoT.

It is hardly surprising that the US-China trade war has now evolved into a technology war. Observer Research Foundation’s (ORF) Samir Saran and Akhil Deo unpack the implications of China’s rise and its implications in a slim and timely volume, Pax Sinica: Implications for the Indian Dawn

(Full disclosure: I am a distinguished fellow at ORF). They point out that while President Xi Jinping has been the most vocal proponent of China’s “road to rejuvenation”, best captured in his 2012 speech by the dream of the “Two Centenaries” — of China becoming a moderately well-off society by 2021, the 100th anniversary of the establishment of China Communist Party, and becoming a fully developed nation by 2049, the 100th anniversary of establishment of the People’s Republic of China — the seeds of the US-China rivalry had already surfaced during the Barack Obama years.

China’s growing economic weight and military modernisation had convinced it of its role in the 21st century, and the 2008 financial crisis in the West boosted its selfconfidence in its State-owned capitalist model. The US responded with its “pivot to Asia”, the decision to bring 60% of its naval forces into the Pacific by reducing the Atlantic presence, and opened negotiations on the Trans-Pacific Partnership. China saw the Obama administration’s decisions as a move towards the containment of China, reminiscent of the Cold War.

The reality is more complex. The US had enjoyed its industry leadership role for nearly a century. This enabled it to become the primary standard-setter and rule maker. Today, the US is witnessing China pull ahead in a number of emergent technologies — genetic engineering, hypersonics, 5G, AI-based facial recognition and quantum computing (China launched Micious, an experimental quantum satellite in 2017).

While the US has tracked foreign investments into US companies since the Cold War as a way of blocking attempts at industrial espionage, it failed to track the growing early stage (seed and angel) and venture capital funding from Chinese sources coming into US start-ups. A report from the Defence Innovation Unit, set up during the Obama administration, concluded that China’s industrial espionage was costing $300 billion annually in terms of stolen intellectual property. Since 2010, Chinese participation in venture deals had gone up, and accounted for 16% in 2015, spread over 271 deals. Last year, the US tightened its export controls on emerging and foundational technologies, and passed the Foreign Investment Risk Review Modernisation Act to monitor investments in key sectors.

Saran and Deo also focus on juxtaposing China’s rise with Indian assertions of being a “leading power”, articulated during Prime Minister Narendra Modi’s first term in office. It was demonstrated by India moving closer to the US justified as “pragmatism”, heightened diplomatic engagement, and willingness to assume greater responsibility (as at the Paris Climate Change summit). Presumably, the rationale was that India’s rise would be supported by the US.

However, it soon led to tensions with China. The Doklam stand-off in 2017 had been preceded by the first Belt and Road Forum, in which India was conspicuous by its absence, having raised questions about the economic viability and transparency of many Belt and Road Initiative projects. China’s insensitive handling of the ChinaPakistan Economic Corridor, coupled with growing presence in the Indian Ocean, were pointers to coming difficulties. Unlike in the South China Sea, where China had presented the world with a fait accompli with its reclaimed atolls, Doklam became a standoff. Since neither country wanted an escalation, and Bhutan stood its ground, China had to back off. India responded by intensifying engagement with the Quad.

The challenge for India is spelt out — “to successfully navigate its relationship with China even as China positions itself to design Asia’s security and political architecture unilaterally”. The answer, according to the authors, is proactive engagement with global governance, supporting a rulebased economic order, and building inclusive, multilateral platforms. These are ideational concepts. Whether these are enough to counter Pax Sinica depends on India’s economic and defence capabilities. Staking a claim to being a “leading power” carries greater weight when backed by hard power.