On the security side, using vehicles and mechanisms such as the AUKUS partnership (including Australia, the UK and the US) and the Quadrilateral Strategic Dialogue (Australia, India, Japan and the US), Washington can be expected to continue to hatch plans to hinder Chinese efforts to develop global value chains. These efforts to impede China’s digital trade globalization will also target flows of talent, capital, commodities and data by setting high standards for commodities and digital trading agreements.
Such calls may not be so effective. Some Asian economies have reckoned that digital trade agreements are incomplete without China. Beijing is in negotiations to join the Digital Economy Partnership Agreement (DEPA), which was launched in June 2020 by Singapore, Chile and New Zealand and will facilitate seamless end-to-end digital trade, enable trusted data flows, and build trust in digital systems.
Indeed, China’s stressed relations with other countries could also ease as these governments, too, focus on domestic challenges during the post-pandemic period. For commercial reasons, they will want to improve ties with China. Friction will probably persist when it comes to global digital trade and standards. And to be sure, economies that are close to the US such as Australia, Canada and Japan will continue to worry about the geopolitical and geo-economic consequences of China’s rise. But over the long term – perhaps a decade – the benefits of their interaction with the Chinese economy will become clearer and tensions could be significantly reduced.
Beyond the need to manage its geo-tech relationship with the US, there is no downplaying the enormous challenges that confront China in the technology space and digitalization. Its micro, small and medium-sized enterprises (MSMEs) remain hampered by weak innovation systems. Although the capital markets have offered opportunities, the fundamental drivers of innovation are still insufficient, especially when ranged against the major state-owned and private platforms.
The energy and drive for furthering the digital revolution may come from cities such as Beijing, Shanghai, Shenzhen and Hong Kong. They need to promote cross-border collaboration in smart-city policy planning, construction and evaluation systems. These metropolises can work together to create data-based infrastructure and governance systems that will underpin China’s net zero carbon ambitions and efforts to achieve the Sustainable Development Goals by 2030. They can also drive digitalization initiatives that will address inequality between sectors, regions and people – and transform China into a modern, prosperous and sustainable economy.
This article represents the author’s personal opinions and does not reflect the positions of any of the institutions with which he is connected.