Justin Sherman, a fellow and international affairs expert at the Atlantic Council, a U.S. think tank, said in an interview with the Financial Times that cloud computing is an area of intense competition that China and the United States are about to see in the coming years.
The Chinese Communist Party’s huge investments at home and abroad have already made it a major player in the race for cloud computing hegemony.
In the latest case, in late 2020, Saudi Telecom, the Gulf state’s largest telecommunications group, announced a partnership with China’s Alibaba Cloud to help Saudi Arabia build its cloud computing infrastructure.
According to research firm Canalys, China has become the world’s second largest cloud computing market after the U.S. Cloud spending in China reaches $19 billion in 2020, accounting for 13% of total global cloud spending in 2020. U.S. cloud spending accounts for 46 percent of total global spending.
“The CCP has always been ambitious. It sees cloud computing as the future.”
Unlike the U.S., which relies heavily on companies and follows a private development path, China’s cloud spending is largely driven by government grants. Last May, the Chinese government said it would allocate $1.4 billion to technology platforms to develop domestic cloud computing services under a “new infrastructure” plan.
Winston Ma, author of Digital Warfare – How China’s Tech Power Is Shaping the Future of Artificial Intelligence, Blockchain and Cyberspace, told the Financial Times, “This ‘new infrastructure ‘ is a big concept, the equivalent of China’s 2007 investment in railroads and high-speed trains as a means of stimulating the economy in a crisis.”
Alibaba Cloud, Tencent Cloud and Baidu.com have all benefited from cloud computing funding from the Chinese Communist authorities. But foreign companies have largely been kept out and denied the same rights that Chinese companies enjoy overseas.
In addition, Beijing has plans to expand its influence beyond its borders by seeking business in Southeast Asia, Africa, Australia, Europe and the United States.
Wenhong Chen, of the Department of Radio, Film and Television and the Department of Sociology at the University of Texas School of Communication, told the Financial Times, “China [the Communist Party of China] has been very ambitious when it comes to cloud computing, which it sees as the future.”
He said the Communist authorities’ policy of prioritizing Chinese companies makes it difficult for competitors such as Amazon and Google to enter the Chinese market, even if they go to great lengths to do so.
Low-cost export overseas an important part of “One Belt, One Road”
The report also said Chinese cloud providers are banking on price competition (a key factor in Europe and Australia) and cultural similarity deals (important for customers in Southeast Asia) to reach their goals.
Mr. Ma, author of Digital War, said this expansion by Beijing is an important part of the Communist Party’s “Belt and Road” initiative, which is not just a Communist Party project to export infrastructure to the outside world, but is also central to Xi Jinping’s foreign policy.
“Cloud computing can enable the Belt and Road countries to digitize and build strong trade relations with China,” Ma said.
In addition, the move would allow China to participate in setting industry standards related to cloud computing in host countries, potentially affecting future international rules for cloud sharing and data protection.
Mr. Ma said the implications would be huge if future international rules were involved.
CCP’s cloud plans to export plans meet more resistance
The Chinese Communist Party’s expansion plans have met with increasing resistance. Experts say the U.S. determination to resist Beijing’s move into cloud computing remains strong, despite the Biden-led White House putting away the tough language of the Trump (Trump) era.
Geopolitical competition due to U.S.-China trade tensions, and a relatively inexperienced domestic Chinese market are hindering Beijing’s ambitions to grow its cloud plans, and more importantly, Chinese cloud service providers are not as mature as Amazon to offer homogeneous services as well as earn trust.
“Cloud policy and operations have become a contentious issue in the U.S.-China bilateral relationship.” said Wenhong Chen of the University of Texas. “The dispute is really about who will develop the next generation of cutting-edge technology.”
Last August, then-Secretary of State Mike Pompeo proposed a broad crackdown on Chinese tech companies that access U.S. data, including restrictions on cloud computing groups that may operate on U.S. soil. He also encouraged other countries to follow suit and join in boycotting Chinese tech companies that do Beijing’s bidding.
“This move is part of the Trump administration’s strategy to get European allies on board and get Australia and Canada to ban Huawei 5G networks in their respective national markets, while also targeting cloud computing providers,” said Chen Wenhong. “Under the Biden administration, while the rhetoric has been toned down, the policy (of restricting the Chinese Communist Party) is still moving forward.”
In addition, tensions between India and China over the border have led New Delhi to blacklist dozens of Chinese-developed applications and restrict investments related to cloud computing.
“The Indian government wants to promote the growth of domestic companies to develop their own cloud technologies. India and other subcontinent countries also see this Chinese expansion as digital colonialism.” The Atlantic Council’s Sherman said.
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