The Belt and Road Initiative and digital business transformation

BUSINESS structure has been isolated into several modules and processes because of growing economic globalisation, which has changed the setup of the global economy and how it operates.

China introduced the Belt and Road Initiative (BRI), designed to bring about global development, in 2013. The agenda, also referred to as "China's Marshall Plan" and perhaps the most significant international development initiative of the current century, intends to increase China's connectivity and economic collaborations with a cluster of participating nations which have grown in number and scope of cooperation over time.

Although the development of infrastructure (such as railways, roads, ports, power plants, fibre-optic cable lines and 5G networks) has been the focus of most BRI ventures, the initiative also covers other fields like collaboration in science and technology and cross-cultural exchange.

The BRI has strengthened the idea of global economic collaboration and the meaning of multilateralism throughout this process, and has given robust encouragement to: endorse the expansion of the global economy over the past nine years; the development and deep assimilation of international value chains, as well as supply chains; and the inclusive and viable growth of associated economies.

Strong impetus has been given by the improvement of quality and efficiency as well as the modernisation and transformation of the nations along the Belt and Road.

To endorse excellent openness and development, China should be dedicated towards creating a resilient, open and inclusive Belt and Road value chain, actively engaging in the global division of labour, and dynamically building new infrastructure, science and technology, service trade, as well as other sectors.

Global economic power has evolved considerably after the 2008 financial crisis. In parallel, a fresh wave of technical and scientific transformations has hastened the reconstruction of international value chains.

Regional value chains are becoming more robust. The BRI can establish new supply networks and local value chains.

A new production network structure and supply chain comprising businesses from China and other emerging nations will be developed as part of the BRI.

Rebuilding of the global value chain offers emerging nations a chance to join the international system of division of labour or improve the worldwide value chain.

Analysts predict that China's expanding technological prowess along its "digital silk road" will set standards for the rest of the world to imitate.

Long before the rest of the world started talking about linked smart cities and technological solutions, BRI had already started on this journey.

Observers anticipate a shift towards Chinese technical supremacy in several areas as the country continues to increase its digital presence in industries as varied as 5G, cloud computing, surveillance technologies and virtual currencies.

In terms of publications and patents for quantum, 5G, blockchain and artificial intelligence (AI) technologies, China already holds the global top spot.

The country appears well-positioned to lead in this field since data powers the growth of AI, and it has access to enormous amounts of data because of its extensive surveillance system.

China was the first nation to conduct widespread tests of a digital fiat currency, the Digital Currency Electronic Payment (DCEP) system. Furthermore, it has already created the largest blockchain environment in the world, linked to more than 100 city nodes.

Analysts concur that China has made significant advancements in several emerging technologies. Technological developments enable China to drive BRI's challenging projects more, strengthen ties with BRI nations, and advance the initiative's overall progress.

Leading the world in fibre-optic technology, China is already helping BRI nations switch from conventional to renewable sources of energy.

Despite having abundant solar energy resources, several BRI-affiliated nations do not have the technologies and resources to create renewable energy structures.

Through BRI, innovative renewable energy technologies can be exported, and Chinese fibre-optic businesses can benefit from local preferential policies, such as tax rebates and preferential treatment for importing equipment.

China's standards have taken the place of international norms in certain infrastructure sectors, such as 5G networks, high-speed rail and ultra-high voltage power grids, as everyone else tries to catch up.

Thus, by working together with Chinese businesses, BRI partner nations can incorporate innovative technologies into their infrastructure projects.

China's technological ability makes it an advantage for these nations to advance BRI's challenging projects, including transportation, renewable energy, power, infrastructure and healthcare, as the digital and physical worlds are closely related in today's technology-driven society.

In the absence of sensors, software and cybersecurity, energy grids, ports and railroads will not be able to function as they do today. China's industrial digitalisation and digital transformation methods are also helpful resources for BRI nations.

Most of these are emerging economies with inadequate experience in handling digital technology. However, they can take advantage of China’s digitalisation know-how.

Since the BRI is largely a funding and investment instrument, exporting technology gives its overall support package a new dimension.

Since Chinese labour and equipment have already been utilised in most BRI ventures, any technological development may simply result in higher-quality or more effective projects.

Anything digital would typically entail a bigger investment amount. BRI recipient markets’ financial ability will also be questioned in this situation, particularly if these economies prioritise building appropriate infrastructure to first meet their domestic demands.

Partnering with Chinese companies is the finest mode for BRI partner nations to benefit from China's technology advancements.

Chinese companies are creating technologies to integrate their services into supply chains to create cash flow streams, whereas the West has placed too much emphasis on profits and too little on cash flow businesses and service lines.

This style of business is comparatively more sustainable than profit-driven corporate models.

Dr Lin Woon Leong is a Senior Lecturer at Taylor’s University, Malaysia. The views expressed here are entirely the writer’s own.

The SEARCH Scholar Series is a social responsibility programme jointly organised by the South-East Asia Research Centre for Humanities (SEARCH) and the Centre of Business and Policy Research, Tunku Abdul Rahman University College (TAR UC), and co-organised by the Association of Belt and Road Malaysia.