The New Metrics for Building Geopolitical Power in a New World

Reuters
April 12, 2020 Topic: Security Region: Americas

The New Metrics for Building Geopolitical Power in a New World

The twin trends of globalization and information technology were supposed to breed a new era of cooperation. Instead, they have created a new form of international competition. The game is no longer to seize the upper hand in conflict and deterrence or to have the most resources; it is to capture the systems of exchange: networks, standards, and platforms.

Beijing has announced a roadmap for its China Standards 2035 industrial plan. China Standards is the successor to, and the strategic force behind, Made in China 2025. It emerges from the National Standards Strategy launched upon Beijing’s accession to the WTO in 2001. And it stems from Beijing’s recognition, one overlooked in the United States, that modern technological developments have transformed state competition—not just its tools, but rather its nature.

The twin trends of globalization and information technology were supposed to breed a new era of cooperation. Instead, they have created a new form of international competition. The game is no longer to seize the upper hand in conflict and deterrence or to have the most resources; it is to capture the systems of exchange: networks, standards, and platforms.

More than any other state, China is competing for those. In the process, Beijing is establishing unprecedented global power. China’s networks grant information-fueled control over military, economic, and narrative domains. They shape governments, companies, and even individuals. They proliferate subversively, parasitically, by co-opting rather than replacing existing systems—piggy-backing off of others’ infrastructures to project Chinese power across the world. The kicker: this approach ends up operating at a profit, fueled by the very systems that it subverts.

Western frameworks tend to focus on “security,” affairs as the chief forum for international competition. These frameworks measure relative power in mass: of capital, of advanced weaponry, of energy deposits. They count aircraft carriers and relative GDP. Such metrics made sense for a world of firm borders and physical goods. That was a world in which the dominant mode of obtaining resources was conflict and the determinative resources could be counted.

But today, the chief mode is exchange. Resources flow constantly over networks that transcend national borders. Information is the most valuable resource of them all. Entanglement is the norm—not just so-called “economic interdependence,” but total embrace in which Coronavirus is global from the moment it emerges, and an economic pandemic as much as a health one; in which the United States literally cannot repair its machine tools without parts from China or dispose of its waste without garbage orders from Beijing.

 

A world of exchange does not mean one of cooperation. Instead, exchange becomes the battlefield. This battlefield is larger and more comprehensive than traditional fora for state competition. It touches every domain and every level of society. At its heart are networks, standards, and platforms.

Exchange is enabled by networks, systems of interconnection: Physical ones, like telecoms and pipelines; virtual ones, like the Internet and financial markets; human ones, like academics and anime fans. Exchange on those networks is governed by sets of rules, or standards: Currency, IP addresses, rail gauges, 5G, WTO regulations. And exchange itself takes place on platforms, many of them virtual: Venmo and Alipay, Facebook and WeChat, the New York Stock Exchange and the United Nations.

 

Networks, standards, and platforms extend across borders. They affect individuals as much as they affect governments. And they can be controlled: Globalization may shrink distance but it does not remove authority. One actor or another is still going to set the rules, govern the platforms, and establish the networks. The actor that does so can take a cut of transactions. He can benefit the chosen players. He can both collect international data and shape it. He can also coerce: At any point and at little cost, he can threaten to obstruct an adversary’s exchange. He controls international exchange. He holds absolute asymmetric leverage.

Think of this in terms of Amazon. Amazon owns American commerce not because it has the best products or production, but because it has the dominant platform. No matter how remarkable a seller’s goods—how great his conventional power—he has to go through Amazon and play by Amazon’s rules. Amazon uses its information control to supplant those sellers’ product capabilities. Leveraging a comprehensive database on transactions, Amazon can identify, say, which chair has captured the millennial market, replicate it at a better price with a higher search rating, and flag it for a targeted buyer. With enough longitudinal data, Amazon can predict how that chair’s market will evolve next year.

Amazon’s power does not stop at the supply side. It also shapes demand: In deciding the information you receive, Amazon determines your incentives, desires, and purchases. Advertisements can be targeted to your proclivities. So can prices, recommendations, and offers for free e-books.

Imagine what happens when a nation-state claims Amazon’s power—but on a global scale, across domains, and with hegemonic ambitions. That country can shape international supply chains to make them depend on it. That country can shape international narrative so that the media tells a positive story—and targets it to receptive audiences. That country can control the global data on land, air, and sea movement, of people and of things, military and commercial. It can feed that data to its champions as they compete for markets. It can adjust that data to adjust insurance rates and credit ratings. Should it so choose, it could cut an adversary off from necessary data—or manipulate what it received.

Can a country really do this?

For the past twenty years, Beijing has been gambling that it can. China’s bid rests on co-opting standard-setting bodies; on exporting new, international platforms; on building the infrastructure for emerging networks; and on subverting existing ones. Beijing propels its offensive by leveraging centralization, scope, and scale against a fragmented world order; by manipulating the Western tendency to separate competition from cooperation, public from private. The systems that were supposed to create global political liberalization have been coopted by their illiberal targets. This is happening in 5G, where Beijing’s subsidized State champions are winning the global market in what will likely prove a foundational infrastructure—and where frictions among the private and public sector, as well as between the United States and its allies, stymy response.

New-type, network power bests traditional power. It does not matter that Amazon does not, off the bat, have the best products or innovate in their development. It benefits from the quality and innovation of every vendor feeding into its network so that the advantages of those vendors become its advantages. Amazon locks in its position because the very vendors it subverts need Amazon’s platform to reach their customers. The only thing worse than living with Amazon is the impossibility of living without it.

The United States boasts the greatest innovative capacity in the world. American companies are the best in the world. So are U.S. military forces. The U.S. dollar is the dominant global currency. None of those strengths is likely to disappear any time soon. But they are no longer determinative. Innovation can be siphoned by the owner of the network over which it is shared. Companies are subject to their platform’s whims. Dollars are transmitted according to larger global standards. And in a world where Beijing controls information, the United States—as Chinese strategists put it—“cannot, will not fight.”

Just as it neutralizes enduring American strengths, the nature of this contest plays to Chinese advantages: Scope, scale, and centralization. Networks, standards, and platforms tend to be differentiated by their size. The biggest one is the best. A standard is adopted because the most amount of people have agreed to it. A platform or network attracts users because it offers the greatest number of connections. China is big. China is also centralized, deliberate, and motivated by a long-term vision where the rest of the global system is fragmented, short-termist, and profit-maximizing. This makes it easy for Beijing to co-opt the world’s companies, multilateral institutions, and even countries – including those ostensibly defending the incumbent international order. 

The United States sees China moving but—without having updated for the network bid—does not see where it is going or the strategic intention guiding it. Yes, the subsidized Chinese telecommunications champion risks leapfrogging legacy companies in 5G. But what comes after?  What happens when U.S. media sources, apps, autonomous systems are bound to Beijing’s dominant platform and have to conform to its rules? What happens when Beijing uses its platform status and information dominance to shape the information we receive and transmit? And what happens when it starts using the United Nations, Netflix, or academia to endorse and enshrine that narrative?

Beijing is already doing this. With its global logistics information platform, it shapes the maritime operating environment: Recent jamming incidents at the Port of Shanghai point to the first-order implications. With its social credit system, China shapes individual and commercial behavior, at home and abroad: Look at U.S. companies sharing their data with Beijing, or Chinese individuals adjusting their internet searches.

U.S. analytical frameworks ought to account for this new-type competition and power. That will require updating traditional metrics in a manner informed by platform economics. Amazon is not profitable. But it is the most valuable company in the world. If Wal-Mart were simply counting profit margins, it would consider Amazon a non-threat. Power today is a function of relative dependence and relative influence; a combination of the ability unilaterally to strip the adversary of his resources and to shape the way he uses those he has. This interaction-defined function is measured in rate statistics rather than counting ones. The role of networks and linkages demands an emphasis on scope and scale rather than mass and proximity, the ability to access resources not to produce them.