In 2018, as 5G began to rise in the periphery, the National Standardization Committee’s Industrial Standards Department of the People’s Republic of China (PRC) saw an opportunity and commissioned a forward-looking study China Standards 2035. The study focused on providing a strategic roadmap for information technology industries: artificial intelligence, big data, cloud computing, 5G, and biotechnology.
A key goal of China Standards 2035 is to support and leverage the strong position of Chinese companies in emerging markets to set standards in the country’s favor, positioning it to further dominate the market as associated technologies evolve. Though not often discussed in these terms, Latin America is an important battleground in which Chinese companies seek to use their growing position in technology industries as a vehicle to set standards and dominate global markets.
The technology industry depends on quality and interoperability with different systems. Thus, technology standards are vital because they provide a universal base line, creating a flawless operation. The U.S. Government understood this need in 1901 when it established the National Institute of Standards & Technology (NIST). NIST notes that “Standards allow technology to work seamlessly and establish trust so that markets can operate smoothly: providing a common language to measure and evaluate performance, make interoperability of components made by different companies possible, and protect consumers by ensuring safety, durability and market equity.”
The rapidly evolving telecommunications industry has been an important arena for standards setting. As new networks such as 3G and 4G were developed, they required massive planning and cooperation between technology companies, service providers, and countries. Correspondingly, international organizations such as 3GGP and ITU have been vital in establishing associated standards.
Chinese investment is no stranger to participating in Latin American markets. It initially focused on extractive sectors and infrastructure projects —including the Belt and Road Initiative which the PRC extended to Latin America in 2019. However, Chinese companies such as ZTE & Huawei also made important breakthroughs in the region. Huawei, in particular, saw a 21.3 percent increase in revenue from its Latin America operations. Much of that growth can be attributed to the company’s development of telecommunication infrastructure in countries like Mexico, Venezuela, and Brazil.
Other Chinese providers are also looking to enter the Latin American market. ChinaMobil, for example, failed to purchase Brazilian carrier, Oi. Companies such as Tencent started to invest in emerging online banking apps after AliPay successfully partnered with Mexican digital payment platform Openpay. At the same time, Huawei commenced integrating its equipment as core components for the Brazilian digital bank Caixa. Additionally, the tech giant Alibaba is making a play at shaping the future of e-commerce in Mexico—they recently signed an agreement with the Mexican state of Guanajuato to train entrepreneurs in e-commerce and other digital sales.
Similarly, Chinese surveillance system providers took interest in the Latin American market, beginning as early as 2007. Countries such as Mexico and Ecuador turned to cost-effective Chinese equipment and software to update their aging security infrastructure. Huawei is using its position in the Latin American market to push emerging surveillance equipment through dialogues such as “Latin America’s First Safe City Summit.” Under the Safe Cities’ framework, Chinese surveillance techniques and equipment are being adopted. Chinese companies are also leveraging COVID-19 to sell new systems in Latin America, surveillance company DaHua donated hundreds of thermal cameras to Argentina, Chile, Colombia and Panama. Additionally, the ride sharing app Didi began using AI to verify if users wear masks.
To the regular eye, these advancements can be seen as company maneuvers that occurred independently. However, early Chinese integration with the tech industry allowed for other Chinese firms to proliferate at a tremendous rate in the region. Since the tech industry is dependent on interoperable products, China developed key technology infrastructure to enter markets through mass donation of technology products, allowing its companies to dominate those markets. For other products to effectively operate within Latin America and other regions, they have to efficiently interact with Chinese systems.
China’s advantage in technology industries in Latin America and elsewhere has geopolitical implications. The Chinese “government led; enterprise driven” system could provide an opportunity for the weaponization of these industries to be used to influence campaigns or even coercion. Major security concerns surround Huawei as it was linked to manipulating its systems to conduct personal and corporate espionage. But even amidst the ongoing allegations, many Latin American countries continue to invite Chinese tech to supply core components to their infrastructure.
Conversely, there are some who believe that the China Standards 2035 does little to increase China’s standard setting abilities. Naomi Wilson, senior director of policy for Asia at the Information Technology Industry Council (ITI) told CNBC that she sees the plan as a message to China’s domestic audience, stating that “it’s an important stage, but it’s not an opportunity to sort of carte blanche rewrite the rules for technology’s future.”
Whether the China Standards 2035 plan becomes an effective roadmap for Chinese foreign policy or makes little to no impact, Chinese involvement in Latin American technology markets is only set to increase. If the U.S. is truly concerned with the growing Chinese influence in Latin America, public denunciations and warnings will not suffice. The U.S. should seek to increase American companies’ participation and leadership in international standard setting bodies, by expanding NIST’s advisory role. By doing so, American companies can provide a competitive alternative to Chinese products.
Raymond R. Dua Jr. is a student at the Virginia Military Institute & an intern at the US Army War College.