China-ASEAN Digital Silk Road under construction

Rapid development of the data economy is giving rise to new forms of cooperation as well as competition

Data is in a stage of rapid growth. According to Statista, an international data organization, the amount of data generated worldwide reached 59 zettabytes (59 trillion gigabytes) in 2020 and may increase about 35 times by 2035. The economic value created by data is also booming. According to an International Data Corporation forecast in 2019, the global data market will feature three major players by 2025－with the Chinese data market accounting for about 28 percent of the pie; the United States about 17.5 percent; and the Europe, Middle East and Africa region about 27.6 percent.

Platform-based multinational corporations are also growing rapidly and becoming monopolistic by controlling user data. At the end of 2019, there were about 74 leading digital platform businesses in the world, of which 35 were US companies and 30 Chinese. However, the US has obvious comparative advantages in terms of market value, with US digital platforms accounting for 74.1 percent of the global total, while Chinese platforms account for 22.5 percent.

The rapid development of the data economy has given rise to new forms of geopolitical competition. Countries and businesses can analyze and predict macroeconomic and social trends in other countries based on massive data collection and collation. However, with data protectionism on the rise, countries are increasingly opting for data encapsulation, access restrictions, and regulatory policies.

In April 2020, the US Agency for International Development released its first ever Digital Strategy, which seeks to build a US-led international digital ecosystem through digital aid, which adopts "US values" as the norm for digital foreign aid and attempts to build a US-centered international digital alliance. Some of the claims made in the strategy are confusing, such as "helping partner countries achieve self-reliance", which is in fact aimed at building an international digital alliance to maintain the interests of the US, based on US technological strength.

On the back of its huge data market and advantages in data economy, the EU seeks to gain a greater say in the international digital rule-making and erect barriers to its data market by introducing the "gatekeeping" draft law, increasing its budget allocation for the digital sector, and beginning research into 6G standards, with an aim of laying the foundation for long-term development in the digital area.

The Quadrilateral Security Dialogue tech network, which was launched in Canberra on Feb 9, may lead to new changes in the international digital landscape. Participants include the National Security College of Australian National University; the Center for a New American Security, a US think tank; Japan's National Graduate Institute for Policy Studies and the Observer Research Foundation, an Indian think tank.

With the establishment of the Quad tech network, the Quadrilateral Security Dialogue is gradually expanding its focus from conventional security to digital, network and other non-conventional security fields, which will also help refine the US' Indo-Pacific strategy by including the digital sector.

Digitally small and medium-sized countries have also signed digital economy agreements and digital currency agreements to build secondary digital alliances away from China, the US and the European Union. The signing of such agreements represents a new phase for global economic alliances. A network of digital economy agreements led by Singapore has been established. There are also constant calls for secondary digital partnerships.

At present, the Asia-Pacific region has become a major arena for digital competition, with Southeast Asia in the spotlight for major powers thanks to the huge potential of its digital economy, in which China plays a crucial role. For geopolitical reasons, Southeast Asia is indispensable for the Indo-Pacific strategy of the US and the EU, as well as the formation of secondary digital partnerships and the development of the global digital economy, since it will become the fourth largest digital market in the world, behind China, the US and Europe.

As global digital competition intensifies, a good digital governance framework is needed for both global and regional development, which is precisely the point of building the China-ASEAN Digital Silk Road.

China is strengthening its digital economy cooperation with the Association of Southeast Asian Nations, having established a ministerial dialogue mechanism for digital economy cooperation with Thailand, signed MOUs on e-commerce cooperation with Vietnam and Cambodia respectively, and started negotiations on a bilateral memorandum of understanding on cross-border e-commerce cooperation with Malaysia.

China is also actively involved in the construction of digital infrastructure in ASEAN countries, with the launch of Alibaba Cloud in Indonesia in 2018 and its expansion in 2020. Besides, Chinese businesses partner with local ASEAN companies mostly through equity investment and mergers and acquisitions. China was the largest source of FDI for ASEAN tech startups from 2016 to the first half of 2019.

One of the key factors for China-ASEAN digital economy cooperation is cross-border data cooperation, which may serve as the catalyst for their greater strategic synergy. It is advisable that China and Southeast Asian countries negotiate digital trade agreements while China and ASEAN set up a regional data and digital technology collaboration mechanism to drive digital cooperation in the form of industry- and business-led ASEAN integration.

In East Asia, China, together with ASEAN and Singapore, may design a regional digital currency package which includes the digital currencies of the Republic of Korea, Japan and Singapore for a China-ASEAN digital currency toolbox to facilitate flows of capital and data and build a new digital governance model in the region. In the future, multilateral diplomacy may also be leveraged via the Regional Comprehensive Economic Partnership and China-EU Comprehensive Agreement on Investment for a China-ASEAN-EU trilateral cooperation platform to shape a broader area for international cooperation on the digital economy and its governance. Countries such as Japan and the ROK may also be included in due course to further extend the East Asian cooperation model on the digital economy.

The author is a professor of the School of International Relations and a researcher at the Center for Digital Governance at Peking University. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.