Data centers as the third arena

As Intel CEO Pat Gelsinger puts it, microchips are the new oil—and will be more important than oil and gas over the next five decades. Because of this, the core national interest of the United States is to maintain technological superiority by denying China the opportunity to catch up in microchip technology. Two columns ago, I looked into how this manifests in a growing US-led alliance. In my previous column, I then added a related topic: the ongoing competition between the US and China over submarine cables, with both nations fiercely competing to leverage their diplomatic and commercial power to make countries choose sides.

Today, we look at data centers. In previous years, Singapore’s reign had been challenged by Indonesia. The Philippines is now seeking to compete, with PLDT, SpaceDC, the Threadborne Group, YCO Cloud Centers, Beeinfotech, and Globe Telecom, Dito Telecommunity, and Converge ICT engaging with foreign partners. What has helped make data centers increasingly attractive domestically is increased cable capacity as funds originally earmarked for China are diverted to places like the Philippines, as well as a favorable policy environment, a growing domestic market and global-ready workforce, translating to a compound annual growth rate of 11.2 percent from 2022-2027.

Investments from the US and EU lack the wallop of full state support. The Digital Silk Road component of the Belt and Road Initiative envisions state “investments in telecommunications-network infrastructure, including 5G, submarine and overland fiber-optic cables, satellite ground tracking stations, data centers, whole-of-system integrated solutions such as ‘smart city’ and security-sector information systems, and select ‘over-the-top’ applications such as financial services and processes (fintech) and e-commerce investments.” Untroubled by elections or even, to a large extent, public opinion, China has been able to focus its energies on long-term planning and swift execution.

The battle began over a decade ago. In 2014, Xi Jinping declared that “The flow of information guides the flow of technology, capital, and talent,” and that the amount of information controlled has become an important indicator of a nation’s soft power and competitiveness.

Both nations, China and the US, are using their laws to foster their national security. China’s rests on twin planks: a personal information protection law modeled on the EU’s regulations, and a data security law. According to a commentary by Reva Goujon: “Beijing’s philosophy on data sovereignty rests on several principles: data localization requirements, state oversight and restrictions on cross-border data flows, the right to force transfers of source code, the protection of personal data, and the state’s right to sweeping surveillance powers.”

For its part, as we’ve seen, the US is enforcing an advanced microchip blockade on China, refusing to give landing rights to cables that directly connect to China, and maintains a Bureau of Industry and Security Unverified List which “subjects foreign firms to strict licensing requirements” as an antidote to China laws requiring companies to share data with the state.

The flow of data itself also brings up national security. Last year, Aynne Kokas’ “Trafficking Data: How China Is Winning the Battle for Digital Sovereignty” was published by Oxford, arguing that a failure of US political leadership, the mania for disruption of Silicon Valley, and Wall Street’s seeking growth at all costs fueled China’s remarkable accumulation of wealth through technology—with Chinese firms quietly mining the US for data to send home. This year’s latest buzzword—artificial intelligence—is leading governments to consider (and act) on its implications. The West is tackling concerns piecemeal; China is taking a much more integrated approach.

A study by our own National Defense College also points out the fourth dimension of the China-US competition: actual military use of cyberspace. Here, China was advanced; for over two decades now, I have been referring to how, in 1996, Wei Jincheng published an article, “Information War: A New Form of People’s War” in the Liberation Army Daily of the People’s Republic of China, and how this thinking has been implemented over the years from internet espionage, to online brigades to trolls, to the “great firewall of China” and now the Digital Silk Road. Theory has been accompanied by practice: China mobilized hackers as far back as 1999 in revenge for the accidental bombing by Nato of its embassy in Belgrade; in 2007, China demonstrated its capacity to destroy satellites in space and Russia did so in 2021 (China is also building the BeiDou Navigation Satellite System to rival GPS).

Email: [email protected]; Twitter: @mlq3