National and International Issues

Digital Silk Route and Pakistan

Pakistan takes pride in being the implementation ground for flagship project of BRI. For quite some time, we have been in the state of self-admiration of this big intervention with all possible benefits to Pakistan, the region and beyond. However, this state of self-admiration could not aid in moving towards concrete interventions at ground level. We are still struggling to find the right strategies for special economic zones, skill development, sustainable livelihoods and a sustainable re-distribution system. While we are stuck here, China has taken another giant leap under the umbrella of BRI and has introduced the concept of “Digital Silk Route”. 
President Xi has been talking about a Digital Silk Route, its components, relevance and importance for China and the world for a few months now. Digital Silk Route (DSR) encompasses areas of big data, quantum computing, artificial intelligence, nanotechnology, cloud storage and 5G, etc. The President is convinced that DSR is a key to sustain economic development and leadership in future. Mr. Chen Zhaoxiong, Vice Minister of Industry and Information Technology is of the view that DSR is here to create “a community of common destiny in cyberspace”. It is an identical concept to President Xi’s vision of shared prosperity, thereby making it apparent that President Xi and his team is leaving no stone unturned to make it a success. 



China has selected Guiyang province for piloting the concept. The province, famous for its defence technician in the era of Chairman Mao, is home to 63 universities and colleges and produce almost 300,000 graduates every year. But the point to be noted here is that most of these graduates are from the field of science and now special focus is being given to education related concept of DSR. It also hosts a software park which employs more than 165,000 people at this point in time with expectations of this number rising to 250,000 in 2021. It is also expected that it will be in a position to earn USD 78 billion in 2021. The Guiyang province is turning into one of the leading hubs for the digital entrepreneurs from across the world. 
China is also investing in 5G infrastructure which is considered key for the successful implementation of Digital Silk Route. Three leading telecom giants of China namely China Telecom, China Mobile and China Unicom have decided to pool resources around the figure USD 180 billion for investment in 5G related infrastructure in a period of seven years. These telecom companies can afford this huge investment in the backdrop of their annual revenue. It was estimated that during the year 2016 alone total revenue of these companies was USD 9 trillion. China has decided not to lose the battle at the front of 5G infrastructure, leading the country to make generous investments. China’s companies are also investing in developing the state-of-the-art servers for better managing its interventions in the field of digital. Cisco, IBM and Ericson have already been engaged in these negotiations. The sustainable development of online payment system in China is also vital, which is in line with the strategy of China to enhance its role and position in the financial sector. 
Beginning in 2015 with the policy directions given by the state council, the government of China has been following the strategy to expand and enhance its control in cyberspace, internet and digital space. It was deemed important to enhance China’s digital footprint, increase control on financial management and transactions, and the internationalization of its currency. It was also envisioned to build a center of networks in China in the future. Independent experts also believe that it is an effort to overcome the problem of overcapacity in the traditional industrial sector. 


The long-term plan of CPEC is not very clear about the inclusion of Pakistan in the DSR initiative. It talked about the ICT promotion, e-commerce, and ICT human resources building in Pakistan, however, the most important areas of DSR like big data, nanotechnology, quantum computing, 5G and artificial intelligence is missing in the long-term plan. One of the possible reasons of omission can be that long-term plan was approved much before the launch of the concept of Digital Silk Route. Nevertheless, with it being a living document both countries can include it in the long-term plan.


Anyways, Chinese companies are now making strong footprint in this sector. Alibaba has emerged as the leading player of e-commerce industry, with its own data or cloud centers built internationally starting in 2009. Now it is planning to establish new centers in India, Malaysia and Indonesia. 
China is also expanding its presence in digital sector and is consequently investing heavily along the Belt and Route countries. It has offered help to many countries in the field of digital space. This is significant given China’s position as a leading player in research and development in the digital space, it is now leading research in artificial intelligence and patent race, obvious in the projects undertaken by its leading companies. Computer Network Information Center and China Unicom have joined hands for the establishment of “5G technology lab”. It is a big step forward as this lab also decided to venture in the field of standardization along with other areas. China Mobile is busy in building optical network for connecting China with Nepal, Myanmar and Kyrgyzstan, and is even ready to venture into the Arctic. Huawei has won the projects of optical fiber in Pakistan and connecting Kenya and Djibouti. China has also established a center of excellence in Thailand with the name of Digital Belt and Route International Center of Excellence. This center has been established to foster research and collaboration among BRI countries to enhance their capacities.      
Pakistan is also a beneficiary in the form of optical fiber and related infrastructure. Huawei being one example as it has been entrusted to build related infrastructure deemed necessary to enhance the capacity of Pakistan in the digital space. The government of China has agreed to invest around USD 40 million in this project. Zong is now a well-established and recognized brand in the field of telecom. It is a front runner in the field of 4G and Pakistan can expect it will be able to benefit 5G technology due to the presence of Zong and Huawei. However, to maximize these benefits Pakistan needs to move quickly and find new ways of engagement. 


Pakistan is dependent upon importing the digital technology instead of developing the skills and products domestically. There are even no signs of development of computers and related infrastructure in the foreseeable future, let alone the development of sophisticated technologies or software. We have gifted minds which can steer the process but the opportunities are very limited. Only well-established state institutions can afford the financial burden to take lead but right now they do not seem much interested.


The long-term plan of CPEC is not very clear about the inclusion of Pakistan in the DSR initiative. It talked about the ICT promotion, e-commerce, and ICT human resources building in Pakistan, however, the most important areas of DSR like big data, nanotechnology, quantum computing, 5G and artificial intelligence is missing in the long-term plan. One of the possible reasons of omission can be that long-term plan was approved much before the launch of the concept of Digital Silk Route. Nevertheless, with it being a living document both countries can include it in the long-term plan.
For all of this the most fundamental question that needs to be asked here remains: Is Pakistan ready to be part of Digital Silk Route? The answer is neither simple nor one-sided but tilted toward “No”. Pakistan’s investment in digital field is very limited in the context of education and human capital development. The country has not been able to produce high quality talent in this field apart from a few exceptions. One of the prime reasons for this developmental delay is lack of encouragement of the sector along with poor infrastructure. Pakistan is dependent upon importing the digital technology instead of developing the skills and products domestically. There are even no signs of development of computers and related infrastructure in the foreseeable future, let alone the development of sophisticated technologies or software. We have gifted minds which can steer the process but the opportunities are very limited. Only well-established state institutions can afford the financial burden to take lead but right now they do not seem much interested. 
Pakistan too, is not benefiting from the Chinese market in this field. Apart from students, there is not much happening on this front. Likely the numbers of students in this field would be limited. In contrast, India is quite ahead of Pakistan in this field. In 2017 Alibaba alone invested almost USD 1.2 billion in the Indian market in addition to other investments in digital space. Huawei, Oppo and Xaomi have also established manufacturing units in India. Another consortium of Chinese investors invested almost USD 900 million in messaging application etc. China has also opened its market for the Indian firms in digital sector. Today we can find many more Indians working in China’s digital sector.


The government should also establish innovation centers like incubators all over the country. A model of profit-sharing should be developed to make these innovation centers more sustainable with less interventions from government in the long run.


Pakistan should learn from Chinese investment in India that only market factors will encourage the investment in digital technology in the coming days. There is a need to work on the concept of the development of human capital in this field and devise a set of instruments to promote startups, entrepreneurship and self-initiatives. Human capital would be key to determine the future of this industry, as this is hugely dependent on the quality of human capital. The Industrial Revolution was able to engage mass unskilled labor but digital space will not provide this facility. Pakistan must create new centers of excellence in this field with all the required facilities to produce quality human capital. 
The Second required intervention is provision of required financial resources for startups and entrepreneurial activities. Private sector can play a very prominent role in the shape of investment for human capital development by providing skills. As it has been guaranteed in Apprenticeship Act 2017. Private sector can also be instrumental in the provision of financial resources with appropriate guarantee from the government. 
The government should also establish innovation centers like incubators all over the country. A model of profit-sharing should be developed to make these innovation centers more sustainable with less interventions from government in the long run. 
This matter should be taken up with China by the government. It can be asked to dedicate a certain amount of resources for digital sector development under CPEC. The starting point can be excellence centers like the center in Thailand. Pakistan and China can build “Digital CPEC Center of Excellence” with sub-offices in provincial headquarters. 
It should be facilitated by a gradual transformation in governance and development of sector in a phase wise approach. The phase would be capacity building of government officials for devising the right set of policy and instruments. These instruments will tailor governance structure according to the need of a sector. Second phase would be more critical. China should be asked to invest in capacity building and skill development of the younger lot of Pakistan, in particular people from marginalized areas should be given priority. This trained younger lot should also be allowed to work in different technological and software development parks for further sharpening their skills. The third phase would be financial partnership for promoting startups in Pakistan. These should also be connected with advanced centers of excellence like Guiyang Province Software Park in China.
Pakistan needs to understand that CPEC is intervention of present with a scope in the future. Digital Silk Route is an intervention of future with benefits in the far future. It is critical for ensuring that Pakistan is moving with the same pace as the rest of the world and creating a future for next generations. The time is now; Pakistan can either jump on the train or miss it!


The writer is a research scholar at SDPI with expertise in global diplomacy, climate change, Water-Food-Energy Nexus, and Track-II diplomacy. He teaches digital diplomacy, negotiation skills and conflict transformation at Foreign Services Academy. He is also Chief Operating Officer, Zalmi Foundatioin.
E-mail: [email protected]

 

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