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The Digital Silk Road: A View in Central Asia

Penjikent Bazaar, Tajikistan © Stefan Krasowski / Public Domain / Wikimedia Commons

In 2013, the Chinese government announced the One Belt One Road initiative (OBOR); and with it plenty of scholarly articles were published. However, much less attention has been given to the Digital Silk Road launched in 2015 (Stec, 2018; Aminian, Fu, and Tung, 2018), as well as its impact on Central Asia (CA). It must be noted that through the Digital Silk Road, China will position itself as the major competitor in the global innovation race, and thus of the world’s economy (Aminian, Fu, and Tung, 2018, p. 325-26). Moreover, in 2017, the Huawei Central Asia Innovation Day was held signalling the institutionalization of this initiative in CA. Thus, this essay aims at understanding what the Digital Silk Road implies and how this shift in Chinese policy will affect Central Asia’s domestic and international spheres. For this purpose, the main objectives of the Digital Silk Road will be analysed: (1) security, (2) economy, (3) geopolitics, (4) and law; with a particular emphasis on each section to understand Central Asian states' position.

In March 2015, the first white paper emphasizing the Digital Silk Road, then called “information silk road”, was issued (Brown, 2017; Shen, 2018). The Digital Silk Road is set to establish China as a global technological superpower (Cheney, 2019, p. 3). It is helpful to visualize it as a foreign and domestic effort (Cheney, 2019, p. iv) as it is a collaborative exercise between the Chinese government and Chinese companies (State Council, 2016). Furthermore, it can be considered an extension of the “going out” policy promoted by Jiang Zemin (Brown, 2017). The initiative provides digital infrastructure alongside the Silk Road Economic Belt and the 21st Century Maritime Silk Road, like fibre-optic cables and data centers (National Development and Reform Commission, 2015, para. 18), as well as integrating new technologies to OBOR, like artificial intelligence, big data, and smart cities (Shen, 208, p. 2684). At the start, as argued by Brown (2017), “many projects still appear linked by political rhetoric rather than a coherent strategy”; however, in CA, specifically in the Greater Central Asia, the new policy is positioning China to be the hegemon in the region, and thus a major competitor to US (and Russia) at international level.

Regional Stability and Security

China's main foreign policy objective is regional stability and security (Sulimanov and Beloglazov, 2018, p. 116). After the fall of the Soviet bloc, China had multiple border conflicts with Central Asian states (Zeiger, 2019). Some of these persist today, like in the Xinjiang region where both China and CA continue to have at their agenda the “decades old terrorism discourse against Uyghur separatists” (Yau, 2019). Thus, it is no surprise that China supplied CA countries surveillance technology at no cost in 2017, mainly Huawei (Zeiger, 2019). This technology was first introduced under the label of “safe cities”, but now the concept has enlarged and was rebranded as “Smart cities”. “Smart cities are broadly defined as urban areas that integrate information and communications technology to improve city operations in everything from traffic flows to water conservation to crime prevention” (Brown, 2017). For example, Kyrgyzstan has opened a new police station with facial recognition technology (Jardine, 2019; Zeiger, 2019), Uzbekistan has closed a deal with Huawei to provide traffic-monitoring system (Jardine, 2019), and Kazakhstan will soon have over 4,000 cameras, supplied by Hikvision, with facial recognition software mainly targeting Uighurs and other minorities (Jardine, 2019). It must be noted that CA countries will soon face a water crisis which smart cities might help to answer. On another note, China will increase its market as the CA population is predicted to grow from 72 million to 95 million by 2050 (Jardine, 2019) and plans to use these cities as technological nodes to construct a China-centric digital infrastructure (Jardine, 2019; Zeiger, 2019) to secure its place as a technological superpower.

Of course, analysts (Jardine, 2019; Yau, 2019; Zeiger, 2019) have two main (interlinked) criticisms. On the one hand, the surveillance technology “give[s] China access to a huge pool of data on Central Asia’s people, which both aids in developing new technology and allows greater monitoring of the cross-border movement” (Jardine, 2019). Going further, “China could monitor or divert data traffic, and even cut off links with entire countries if it wished” (Siddiqui, 2019). Thus, a relation of domination is plausible. On the other hand, the infrastructure is implemented to benefit China, not CA countries, and thus it might end up negatively affecting their economies. This means that the privatization will come with social instability, as seen with the growing anti-Chinese sentiment, especially regarding the Uighur question and unemployment (Jardine, 2019).

Chinese-centric Global Supply Chain through PPP

The Digital Silk Road is a Public Private Partnership between Chinese companies and its government (Ministry of Foreign Affairs of the People’s Republic of China, 2017), and between Chinese companies and the Central Asian governments. Regarding the alliance between Chinese government and its companies, it is reported by the Digital Belt & Road Research Center of Fudan University that Chinese Foreign Direct Investment (FDI) is focused on 8 areas: “e-commerce, communication infrastructure and 5G, fintech, smart cities, industrial internet of things, smart terminals, information technology, media and entertainment” (PierNext, 2020). These investments play a key role in the creation of China as a superpower. FDI in digital infrastructure increases internet connectivity which in turn increases Chinese e-commerce sales along the Digital Silk Road (Brown, 2017). All the FDI translates to data which is today as valuable as oil and gas. As argued by the vice-president of Alibaba, investment in data centers “has served the purpose of paving the road and building the bridge for other Chinese companies in their overseas operations, especially software companies” (Cheney, 2019, p. 5). The circle of Chinese FDI translates into having 30.3% of its GDP come from the digital economy in 2016 (Cicenia, 2018). Moreover, China promotes companies’ expansion due to domestic limitations regarding energy and demand. On the one hand, China is poor in resources, and CA states have vast reserves of oil and gas (Sulimanov and Beloglazov, 2018, p. 117). Thus, good relations are necessary to ensure vitality of supplies, and subsequently reducing dependency on ocean courses. On the other hand, China has a problem of industrial overcapacity and Beijing plans to solve it through large-scale infrastructure abroad, and facilitating exports (Shen, 2018, p. 2687). The “Digital Silk Road”, in particular, has been perceived as playing a both pioneering and fundamental role in these ambitious and interrelated goals'' (Yang, 2017). The Digital Silk Road has enabled Chinese ICT manufacturers to continue expanding production through CA countries, and it has allowed to create an institutionalized pathway that links Europe to China, making “Central Asia increasingly become a transport hub” (Swanström, 2011, p. 8). However, this expansion implies a significant financial burden that has a long return on investment. Thus, transnational market pressure could create tensions (Shen, 2018, p. 2692).

Regarding PPP between Chinese companies and Central Asian states, the main positive outcome is that as a result of Chinese competitive pricing (Jardine, 2019), CA governments are producing national strategies and laws on advanced technology that create a ground to build a more stable and economically sound CA. To start, Uzbekistan has introduced the “Smart city” concept, now enlarged to “Smart Products”, which will be crucial to build the core foundations for developing the tech sector (Younas, 2020a, p. 5). It has also produced new laws that favour investment and business climate (Younas, 2020a, p. 4), as exemplified with Huawei’s 5G investment (Jardine, 2019). Also, Kyrgyzstan has introduced the e-government, meaning paperless data exchange, which is the first step of the Taza Koom 2040 project. “A human-centred initiative to transform the country into a digital economy with digitally literate citizens, while incorporating new and expansive technologies” (Younas, 2020b, p. 11). Today, through Huawei, 8 out of 10 Kyrgyz have internet access (Jardine, 2019). Furthermore, Kazakhstan approved the “Digital Kazakhstan” program in 2018, where the objective is to increase “living standards of the country's residents by using digital techniques” (Younas, 2020b, p. 4), which will in turn increase its GDP. The PM has also stated that he wants to create an IA national cluster with the help of the World Bank (Younas, 2020b, p. 6). Tajikistan and Turkmenistan have not yet developed national programs. However, Chinese investment also carries risk. According to Hurley, Morris and Portelance (2018), Kyrgyzstan and Tajikistan are states vulnerable to debt distress as China owns 41% and 53% of each respective countries’ debts (Kyzy, 2019; Zeiger, 2019). More precisely, Tajikistan sells land and grants concessions to China in order to repay the loans (Kyzy, 2019). The issue becomes more problematic when the imported Chinese labour is debated. It has generated public protests in Kyrgyzstan and Kazakhstan (Kyzy, 2019) as OBOR-funded programs have mainly Chinese workers (Kyzy, 2019). Also, all project's data are managed by China, resulting in dependency to the China-centric supply chain (Yau, 2019).

Geopolitics: Russia and the US

As noted by Lin Nianxiu, Deputy Head of the National Development and Reform Commission, "China is willing to deepen and widen coordination and cooperation with countries around the world to benefit people" (Moody and Yu, 2017). What she does not note is that economic interdependence is the means to become the regional hegemon (Cheney, 2019, p. 9). Economic interdependence in CA takes the form of submarine cables, terrestrial fibre-optic cables, and satellite links (Shen, 2018, p. 2692), and contributes to the China-centred global network system. This system is also used to advance China’s geopolitical influence, and in this part of the essay the question of Russia and the US will be discussed.

Firstly, when President Xi presented the OBOR initiative back in 2013, he described it as a cooperation between China, CA, and Russia (Sulimanov and Beloglazov, 2018, p. 116). Such cooperation is plausible as there are no relevant ideological differences between the three regions (Laurelle and Peyrouse, 2009, p. 173). This cooperation is exemplified in the Shanghai Cooperation Organization, where there is a particular emphasis on advanced technologies (Sulimanov and Beloglazov, 2018, p. 116; Younas, 2020b, p. 13). However, “the Russo-Chinese alliance in Central Asia is based upon very real but only temporarily common interests” (Laurelle and Peyrouse, 2009, p. 182). The common interest is the antagonism to the US (Zeiger, 2019). But in the near future, the differences might be exacerbated as “the Russo-Chinese partnership functions in Central Asia because Beijing wishes to preserve Russian domination in the region” (Laurelle and Peyrouse, 2009, p. 182). This appears to be changing, as seen in the “Regional Stability and Security” section of this essay. Also, a decay of relations is plausible due to energy interests’ differences (Laurelle and Peyrouse, 2009, p. 171). Nonetheless, even if CA countries want to diversify their allies, “China has economic influence in Central Asia, [but] Russia still has a cultural influence on these countries” (Zeiger, 2019). Therefore, even though CA states are perfect for blackmailing Russia, the social consequences are too big (Laurelle and Peyrouse, 2009, p. 173). Then, China and CA countries have established fruitful bilateral relations, but for the moment, this coordination needs to be with Russian support (Sulimanov and Beloglazov, 2018, p. 119).