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1. How Huawei’s Localization in North Africa Delivered Mixed Returns

Author:
Tin Hinane El Kadi
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Trade between China and North Africa has increased significantly since the early 2000s, but it has largely reproduced patterns of unequal exchange. Since they were unveiled, the Belt and Road Initiative (BRI) and the Chinese government’s 2016 Arab Policy Paper have signaled the promise of a qualitative shift in China’s engagement with the region. China has committed to increase investments in high-value-added sectors and to boost cooperation in science and technology with countries across North Africa. The digital space is a notable aspect of recent China–North African partnerships. Chinese tech firms are becoming ever more important actors in North Africa through the Digital Silk Road, the digital component of the BRI. North African governments see the Digital Silk Road as an opportunity to help bridge the digital divide and bolster their own national efforts to build digital economies and create high-quality jobs for the millions of unemployed university graduates across the region. In recent years, the region has become home to notable Digital Silk Road projects such as smart cities, satellite navigation centers, data centers, and network infrastructure. Huawei’s localization strategies in Algeria and Egypt show that, far from imposing a one-size-fits-all blueprint on other countries, as Beijing is often depicted as doing in U.S. and European media and policy discussions, Chinese tech players adapt their engagement depending on local development agendas. Flexibility, customization, and services tailored to local demand have been cornerstones of Huawei’s localization strategies in North Africa. Accommodating local development priorities is central to Huawei’s success in globalizing its business ventures. The Chinese firm has responded favorably to Algeria’s and Egypt’s attempts to leverage foreign companies for conducting more value-added activities within their respective economies. Among other things, Huawei opened its first African factory in Algeria, employing Algerians to assemble products for and beyond the Algerian market. It also launched an OpenLab for conducting research and development (R&D) activities in Egypt and established partnerships with several universities in the region to train local students. However, closer scrutiny of Huawei’s localization in both Algeria and Egypt indicates that the company improved its brand image without engaging in meaningful capacity building. For all its success at winning the hearts of government officials across the region, Huawei has engaged in training, manufacturing, and R&D in a way designed to maintain the firm’s technological edge. The Chinese tech giant has managed to localize seemingly developmental activities in North Africa without contributing much to technological upgrading. North African governments should take lessons from China’s playbook of how it became a technological superpower. This means adopting policies that could maximize the benefits of Chinese and non-Chinese investments by ensuring positives spillovers and protecting potential local tech champions. Increasing economic integration across North African countries and moving beyond fragmented bilateral commercial negotiations with China are two steps that may help level the playing field with the Asian giant.
Topic:
Development, Science and Technology, Telecommunications, Huawei, and Digital Space
Political Geography:
China, Asia, Algeria, North Africa, and Egypt

2. U.S.-China Technological “Decoupling”: A Strategy and Policy Framework

Author:
Jon Bateman
Publication Date:
04-2022
Content Type:
Special Report
Institution:
Carnegie Endowment for International Peace
Abstract:
A partial “decoupling”2 of U.S. and Chinese technology ecosystems is well underway. Beijing plays an active role in this process, as do other governments and private actors around the world. But the U.S. government has been a primary driver in recent years with its increased use of technology restrictions: export controls, divestment orders, licensing denials, visa bans, sanctions, tariffs, and the like. There is bipartisan support for at least some bolstering of U.S. tech controls, particularly for so-called strategic technologies, where Chinese advancement or influence could most threaten America’s national security and economic interests. But what exactly are these strategic technologies, and how hard should the U.S. government push to control them? Where is the responsible stopping point—the line beyond which technology restrictions aimed at China do more harm than good to America? These are vexing questions with few, if any, clear answers. Yet the United States cannot afford simply to muddle through technological decoupling, one of the most consequential global trends of the early twenty-first century. The U.S. technology base—foundational to national well-being and power—is thoroughly enmeshed with China in a larger, globe-spanning technological web. Cutting many strands of this web to reweave them into new patterns will be daunting and dangerous. Without a clear strategy, the U.S. government risks doing too little or—more likely—too much to curb technological interdependence with China. In particular, Washington may accidentally set in motion a chaotic, runaway decoupling that it cannot predict or control. Sharper thinking and more informed debates are needed to develop a coherent, durable strategy. Today, disparate U.S. objectives are frequently lumped together into amorphous constructs like “technology competition.” Familiar terms like “supply chain security” often fail to clarify such basic matters as which U.S. interests must be secured and why. Important decisions are siloed within opaque forums (like the Committee on Foreign Investment in the United States [CFIUS]), narrow specialties (like export control law), or individual industries (like semiconductors), concealing the bigger picture. The traditional concerns of “tech policy” and “China policy” receive outsized attention, while second-order implications in other areas (such as climate policy) get short shrift. And as China discourse in the United States becomes more politically charged, arguments for preserving technology ties are increasingly muted or not voiced at all. This report aims to address these gaps and show how American leaders can navigate the vast, perilous, largely unmapped terrain of technological decoupling. First, it gives an overview of U.S. thinking and policy—describing how U.S. views on Chinese technology have evolved in recent years and explaining the many tools that Washington uses to curb U.S.- China technological interdependence. Second, it frames the major strategic choices facing U.S. leaders—summarizing three proposed strategies for technological decoupling and advocating a middle path that preserves and expands America’s options. Third, it translates this strategy into implementable policies and processes—proposing specific objectives for U.S. federal agencies and identifying the technology areas where government controls are (or are not) warranted. The report also highlights many domestic investments and other self-improvement measures that must go hand in hand with restrictive action.
Topic:
National Security, Science and Technology, Intellectual Property/Copyright, Authoritarianism, Economy, Espionage, Military, and Interdependence
Political Geography:
China, Asia, North America, and United States of America

3. Localization and China’s Tech Success in Indonesia

Author:
Gatra Priyandita, Dirk Van Der Kley, and Benjamin Herscovitch
Publication Date:
07-2022
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
On average, Indonesians distrust China and many Chinese firms. Yet Huawei and to a lesser extent ZTE have successfully positioned themselves as trusted cybersecurity providers to the Indonesian government and the Indonesian nation. This has been no easy feat given long-held Indonesian animosity toward China. Many Chinese companies have faced protests over concerns they were taking local jobs. Huawei and ZTE have suffered no such fate. Nor has there been a broad coalition of Indonesian voices against using Chinese technology in critical telecommunications infrastructure. In short, Indonesians care a lot more about Chinese cement plants than they do about Huawei involvement in 5G networks. Gatra Priyandita Gatra Priyandita is an analyst at the International Cyber Policy Centre at the Australian Strategic Policy Institute, where he leads a project researching cyber-enabled intellectual property theft. He is a political scientist by training and specializes in the study of foreign policy and security in Southeast Asia. He holds a PhD in political science from the Australian National University. This is a vastly different conversation to those happening in rich liberal democracies. Huawei and ZTE have been able to achieve success in Indonesia, despite a sense of ambivalence among the Indonesian political and defense establishment about Chinese intentions and growing Western scrutiny over the use of Chinese technology in broadband networks. As other papers in this series have demonstrated, Huawei and ZTE needed to localize their strategies. Like elsewhere in the world, available evidence suggests that part of Huawei’s and ZTE’s value proposition is cheaper prices (compared to those of competitors) for high-quality technology. But that is only part of the story. Huawei has positioned itself as Indonesia’s cybersecurity provider of choice by offering enormous cybersecurity and other related training programs across the country for groups ranging from senior government officials to students in rural Indonesia. Much of this training is technically focused on practical vocational skills with a hope that students one day will become customers. In addition, the company offers an attractive maintenance and upkeep package. Since the mid-2000s, Chinese information and communications technology (ICT) firms have created training centers in partnership with local Indonesian telecoms companies and universities to train the next generation of Indonesian engineers and tech specialists. Government agencies are also increasingly targets of training and capacity-building programs, with Huawei claiming that 7,000 government officials have participated in its training programs. The Indonesian government, corporations, and ordinary citizens alike have welcomed Huawei and ZTE as essential partners in their efforts to build both the infrastructure and human capital necessary to prosper in the twenty-first century’s digital economy. What Huawei and ZTE offer is knowledge transfer, not technology transfer. The technology is still being built in China by Chinese firms. Huawei’s role in training relates instead to capacity building. Indonesians will install, maintain, and use the networks. China will build the hardware. There is also evidence that China has had some rhetorical success in pushing its version of cyberspace governance. Beijing’s preferred cyberspace governance language was inserted into a memorandum of understanding between Indonesia’s National Cyber and Crypto Agency and the Cybersecurity Administration of China. However, it is difficult to see how the memorandum has influenced Indonesia’s cybersecurity governance in practice. One of the concerns often leveled by rich liberal democracies is that reliance on Chinese tech will end up aligning the political interests of countries like Indonesia with those of China. Other key worries are China’s pervasive espionage and the enduring (though as yet unrealized) risk that Chinese companies with a dominant role in an ICT ecosystem could be used by Beijing to apply coercive political pressure. Despite Indonesia’s embrace of Huawei and ZTE, political leaders in Jakarta have not simply disregarded the hard security questions posed by upgrading ICT equipment, especially when foreign suppliers are involved. Indonesian officials simply rate the need for development and cybersecurity-related capacity building higher than the risk of using Chinese ICT hardware in their critical infrastructure systems. If rich liberal democracies are concerned about this trend, then they need to offer workable alternatives that place Indonesia’s enormous digital development needs at the heart of any value proposition. It is unlikely that Indonesia will stop using Chinese hardware in its infrastructure, but alternatives could prevent overreliance.
Topic:
Foreign Policy, Science and Technology, Cybersecurity, Telecommunications, and Localization
Political Geography:
China, Indonesia, and Asia

4. How China Learned to Harness Israel’s Media and Booming Tech Scene

Author:
Roie Yellinek
Publication Date:
10-2021
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Israel and China established full diplomatic relations only in 1992, making Israel almost the last Middle Eastern country to do so. Starting in the early 2000s, ties between the two countries began to blossom, mostly because the Chinese government started to view Israel as a global technology hub and began seeking to capitalize on Israel’s innovation capabilities to help meet its own developmental needs and strategic challenges. In addition, as China’s rivalry with Israel’s leading ally, the United States, has heated up, Beijing’s interest in Israel also has gotten stronger. In light of Israel’s status as a major technology hub and a leading U.S. ally, China has sought to deepen its influence in Israel through media engagement and other forms of outreach. As Chinese actors have pursued technological innovation and greater political influence in Israel, they have employed three basic approaches to court favor in and through Israeli media circles: direct messaging to the Israeli public in local Hebrew-language newspapers, the use of Chinese outlets (especially the Hebrew department of China Radio International) targeted at Israeli audiences, and efforts to leverage prominent public figures friendly toward China to amplify favorable messages delivered on these local Israeli and Chinese platforms. China’s messaging strategy in Israel has evolved in three stages. Early on, this strategy mainly included recycled talking points from the Chinese Communist Party that do not always translate well overseas. Between 2015 and 2018, this messaging from Chinese actors started to become more direct and tailored for the Israeli people. Since 2018, Chinese engagement has expanded to include a much wider variety of Israeli media outlets, which has meant even more direct access to ordinary Israelis. This strategy and other elements of China’s diplomatic outreach to Israel seem to be having an impact. According to 2019 polling from the Pew Research Center, Israeli respondents view China more positively than those in any other Western-oriented countries that took part in this survey did. These results are an outgrowth of China’s desire to build influence vis-à-vis Israeli society, especially in terms of Israelis’ views on China. Chinese government officials and other actors see this campaign toward the Israeli people as part of a broader and more important strategic campaign, as Beijing competes with Washington for worldwide influence. Israel has a clear national interest in carefully examining how and why Beijing deploys such strategic messaging and how Chinese actors have leveraged local conditions, language habits, and consumer preferences to advance their objectives. The new Israeli government under Prime Minister Naftali Bennett must act prudently and keep these Chinese messaging activities in mind as it balances and advances Israel’s foreign policy interests, seeking to underscore that it does not see China as an enemy but that cooperation with Beijing needs to be pursued in the right way.
Topic:
Diplomacy, Science and Technology, Bilateral Relations, and Media
Political Geography:
China, Middle East, Israel, and Asia

5. The Global Expansion of AI Surveillance

Author:
Steven Feldstein
Publication Date:
09-2019
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Artificial intelligence (AI) technology is rapidly proliferating around the world. Startling developments keep emerging, from the onset of deepfake videos that blur the line between truth and falsehood, to advanced algorithms that can beat the best players in the world in multiplayer poker. Businesses harness AI capabilities to improve analytic processing; city officials tap AI to monitor traffic congestion and oversee smart energy metering. Yet a growing number of states are deploying advanced AI surveillance tools to monitor, track, and surveil citizens to accomplish a range of policy objectives—some lawful, others that violate human rights, and many of which fall into a murky middle ground. In order to appropriately address the effects of this technology, it is important to first understand where these tools are being deployed and how they are being used. Unfortunately, such information is scarce. To provide greater clarity, this paper presents an AI Global Surveillance (AIGS) Index—representing one of the first research efforts of its kind. The index compiles empirical data on AI surveillance use for 176 countries around the world. It does not distinguish between legitimate and unlawful uses of AI surveillance. Rather, the purpose of the research is to show how new surveillance capabilities are transforming the ability of governments to monitor and track individuals or systems. It specifically asks: Which countries are adopting AI surveillance technology? What specific types of AI surveillance are governments deploying? Which countries and companies are supplying this technology?
Topic:
Science and Technology, Privacy, Surveillance, and Artificial Intelligence
Political Geography:
China, Asia, and Global Focus

6. The Future of Nuclear Power in China

Author:
Mark Hibbs
Publication Date:
05-2018
Content Type:
Special Report
Institution:
Carnegie Endowment for International Peace
Abstract:
China is on course to lead the world in the deployment of nuclear power technology by 2030. Should it succeed, China will assume global leadership in nuclear technology development, industrial capacity, and nuclear energy governance. The impacts will be strategic and broad, affecting nuclear safety, nuclear security, nonproliferation, energy production, international trade, and climate mitigation. Especially critical is whether China achieves an industrial-scale transition from current nuclear technologies to advanced systems led by fast neutron reactors that recycle large amounts of plutonium fuel.
Topic:
Climate Change, Energy Policy, Science and Technology, Governance, Nuclear Power, Nonproliferation, and Industry
Political Geography:
China and Asia