US should offer a digital highway initiative for Asia

One of China's greatest contributions to global strategy has been the ability to turn the building of roads and infrastructure into metrics of national power and global influence.

To Beijing's credit, the Belt and Road Initiative (BRI) is a brilliant diplomatic and strategic marketing tool for China Inc.

China, with much fanfare in the developing world, is doing what no other power has accomplished, perhaps since president Dwight Eisenhower's United States in the post-World War II environment - namely, the ability to integrate various tools of national power, from commerce and finance to diplomacy and military.

Yet China is able to take it one step further and systemically advance its national interests on a global stage. Unfortunately, neither the US nor the so-called Western order has identified an effective counter-strategy to the BRI.

American strategists continue to get trapped in the quixotic sands of trying to create a singular and overarching US strategy towards China, as if it were a monolithic creature imbued with robotic decision-making ability.

The failure of this overly academic quest is simple. China is just too complex - corporations, investors, peoples and governments have competing interests that make it impossible to articulate a high-quality, singular and definable American strategy.

One constant, however, is that a bipartisan consensus exists in the US that we will not go "road for road" or "bridge for bridge" with China in capturing the hearts and minds of Asean, Africa or Latin America.

What is needed is a fundamental readjustment as to how the US can both support and strengthen its influence while providing a counterpoint to China's ability to define "power and influence" as "roads and bridges". One such area for contestation that will define the virtual highways and roads is the technology domain.

Singapore's 2018 Asean chairmanship offers a natural window for the US to advance a more ambitious technology agenda in Asia. American companies and policymakers should leverage Singapore's connectivity agenda by establishing a fund that allows a diverse range of companies, private investors and international financial institutions the ability to lead the creation of digital highways, which will facilitate the development of technological infrastructure and enable the success of markets worldwide - The Asia-Pacific Technology Fund (TAP-TF).

Of course, many obstacles are present in this effort. The main challenge is driven purely by market dynamics.

Chinese consumers have a vast appetite for technology, while American technology companies have a strong incentive to feed that appetite. Big American multinational corporations with exposure to China are going to be less inclined to participate, due to the risk of losing their respective share of the Chinese market.

However, as almost any US technology company will acknowledge in private, it is only a matter of time before its market position in China erodes, its intellectual property is stolen and China fully controls the development and manufacturing of the entire technology chain.

To overcome this hesitation, the US should work with the international financial institutions of which it is a large donor - like the Asian Development Bank (ADB) - to initially develop a general partner structure to capitalise on the TAP-TF and, on a project basis, allow for the participation of American technology companies as co-investors with the goal of fully invested limited partners over time.

In this scenario, the US representative to the ADB would also work to invite participation from like-minded countries, such as Japan, Australia and South Korea, to further finance this investment vehicle.

A TAP-TF that focuses on investing in large-scale, national technology projects presents five key benefits for US interests, both national and business:

1. It supports market goals for US companies that would otherwise have a difficult time competing against subsidised Chinese offerings.

2. It enables US companies (and other partners) to more effectively bid on large-scale projects that require government financing to offset risk.

3. It proactively demonstrates to Asean and Asia that the US has an economic strategy, albeit not a replacement for real trade agenda;

4. It ensures the promulgation of secure and safe technology that presents countries with the independence necessary to develop information highways for its people; and

5. It advances connectivity that is fundamental to holding governments and decision-makers accountable, particularly in parts of Asia where corruption and backroom deals often sacrifice political openness for nefarious or self-interested gains.

In addition, a TAP-TF would give a supercharged mandate for US diplomats and corporations to work hand in hand with their counterparts from Japan, South Korea and South-east Asia to Europe to develop digital rules of the road.

Harnessing the creative power of the private sector will be essential to marketing this effort to ensure that it receives the publicity needed to recast a critical domain of global competition from roads and highways to the Internet.

The market for telecommunications infrastructure is large enough, impacting virtually 100 per cent of the world's population and generating approximately US$1.5 trillion (S$1.98 trillion) annually.

With the right alignment of government support, political will and common cause, the US, its allies and the strength of their respective technology and investment companies can build the digital roads that redefine traditional and staid metrics of power and influence.

This will be a difficult path, but China has shown the resolve.

Now the US and its companies must also show that resolve, and Singapore's Asean chairmanship might just be the right forum to do something new and bold.

• The writer is president and co-founder of The Asia Group, a capital and strategic advisory consultancy in Washington and Hong Kong. He was a former US deputy assistant secretary of state for East Asian and Pacific Affairs responsible for US multilateral engagement with Asean.

A version of this article appeared in the print edition of The Straits Times on February 08, 2018, with the headline 'US should offer a digital highway initiative for Asia'. Print Edition | Subscribe