Wednesday, May 31, 2023

[Nikkei Asia] Taiwan's island internet cutoff highlights infrastructure risks

Taiwan's island internet cutoff highlights infrastructure risks

Region has to improve security and resiliency of critical undersea cable networks

By Jason Hsu and Charles Mok 

Jason Hsu is a senior research fellow at Harvard Kennedy School and a former legislator in Taiwan. Charles Mok is a visiting scholar at Stanford University's Cyber Policy Center and former legislator in Hong Kong.

In early February, the two cables that connect the Matsu Islands at the north end of the Taiwan Strait to Taiwan itself were each broken by Chinese ships in separate incidents over the course of a week.

Quick relief was unavailable. No undersea cable repair ship could reach the islands, which are controlled by Taiwan but just offshore from Fuzhou, a coastal Chinese provincial capital, until late April.

While it is unclear whether the cables were cut intentionally, the incidents serve as a warning of the vulnerability of Taiwan's digital infrastructure.

The threat of cyberwarfare has gotten a lot of attention in Taiwan. The island's government, civil society and public are well aware of the need to combat disinformation, especially in relation to elections, and to build defenses against millions of daily cyberattacks.

A particular intense wave of cyberattacks, some targeting critical infrastructure, came last August in the wake of a visit to Taipei by then-U.S. House Speaker Nancy Pelosi. But a complete loss of Taiwan's connection to the internet would be particularly devastating.

Looking more broadly at East and Southeast Asia, it is clear that critical digital infrastructure is under increased threat and uncertainty due to U.S.-China tensions and Beijing's belligerence in the South China Sea.

Since 2020, Washington has been refusing to license American companies to invest in undersea cable consortia with Chinese companies or in new cables that would connect directly to China, including Hong Kong.

This has undermined Hong Kong's previous role as a premier hub of regional internet traffic.

Due to Washington's change of policy, the much-touted Pacific Link Cable Network, which was to be the first to link California and Hong Kong directly and has backing from both Google and Facebook parent Meta Platforms, had to be rerouted to terminate in Taiwan and the Philippines.

Another cable project that would have linked California to Hong Kong, the Bay to Bay Express Cable System, backed by and Meta, also dropped Hong Kong in favor of the Philippines. Indeed, the Philippines has emerged as a winner in the reconfiguration of the region's critical digital infrastructure.

New undersea cable projects connecting the U.S. West Coast to Singapore that might previously have been routed through Japan and Hong Kong, such as the Echo Submarine Cable System and the Bifrost Cable System, are instead taking paths past Guam, the Philippines, Indonesia and Malaysia to bypass the South China Sea to avoid possible disruption from China's maritime claims there. At the same time, China has begun to forcefully demand a say over projects to lay and maintain undersea cables in the South China Sea, causing significant delays in the work.

This is why the Matsu incident should not be viewed as an isolated event, or just about the disruption of a small portion of Taiwan's connectivity. Rather, the incident highlights the need to focus on the security and resiliency of the critical digital infrastructure of Taiwan, East Asia and Southeast Asia more broadly.

It was thus no surprise that concerns about secure and resilient digital infrastructure were a key focus of discussions at the Group of Seven digital ministers' meeting in Takasaki, Japan, last month.

The action plan adopted then urged particular attention to the need for data route diversity and redundancy, ensuring that undersea cable routes are secure and working with the World Bank and other international institutions to facilitate critical digital infrastructure projects for the underserved regions in the world.

Similarly, after a short meeting of Quad leaders on the sidelines of the G-7 summit in Hiroshima this month, the grouping jointly announced the new Quad Partnership for Cable Connectivity and Resilience to strengthen and support quality undersea cable systems in the Indo-Pacific area. The four Quad nations each have strategic maritime interests that stretch from the Pacific to the Indian Ocean, including through the contentious South China Sea.

Taiwan itself needs to do more to shore up its digital resiliency. The government is investing around $130 million to build and launch two satellites in 2025 and 2026 to explore the use of low-Earth orbit communications systems. However, this effort is too little, too late. Such satellites may be viable as supplementary backup systems but cannot replace the stability and capacity of fiber-optic cables.

Taiwan should also seek to coordinate with the new Quad cable initiative. Such efforts are especially important to Taipei's ability to assure investors that the island has enough redundancies to keep its networks up and running even if China imposes a blockade.

Taiwan should also team up with Japan and South Korea, two of its closest regional and democratic neighbors, to co-invest in advanced, high-capacity undersea cable projects to sustain bandwidth growth for their digital economies to continue to thrive. An East Asian digital trade and technology pact among these economies would go a long way toward leveraging their markets to create more opportunities in digital transformation and data trade.

The trio could further collaborate by allocating capacity for shipbuilding and providing services for undersea cable laying and repair. This would be a boon not just in case Matsu is cut off again, but could ensure expedited repair assistance for the whole region.

Published by Nikkei Asia, May 31, 2023

Thursday, May 18, 2023

[Diplomat] Facing Pressure From China, Can the US Recreate Silicon Valley?

 Facing Pressure From China, Can the US Recreate Silicon Valley?

The Biden administration’s plan to establish tech hubs across the U.S. can only succeed with effective private-public-academic partnership.

For decades, metropolitan regions all over the world and their respective governments have unleashed numerous initiatives to remake themselves to be the “next Silicon Valley.” Within the U.S., labels such as Silicon Alley, Silicon Beach, Silicon Bayou, Silicon Desert, Silicon Hills, Silicon Holler, Silicon Peach, Silicon Prairie, Silicon Shire, Silicon Slopes and so on have come, and gone. Overseas, there are Silicon Wadi (Israel) and Silicon Roundabout (East London), as well as frequent questions about whether Singapore, Taiwan, or India is the real Silicon Valley of Asia. In China, Zhongguancun in Beijing, as well as the southern city of Shenzhen, vying to be the equivalents of Silicon Valley.

For many years, those who have been studying how Silicon Valley came about in the San Francisco Bay Area would point to a wide range of success factors: the role of universities, early pioneering entrepreneurs and venture capital investors in the region, and propitious timing, from the transformation from the defense industry in the 1930s to the emergence of the semiconductor industry in the 1950s, followed by the computer industry and then the internet. Even the weather and the culture in the area are identified as favorable factors that became magnets for talents from across the country and the world.

In other words, Silicon Valley did not happen because of a top-down government policy design, but because of natural and even coincidental convergences of people, capital, research, and, yes, public policy.

So, it may not come as a big surprise that none of the other wannabes from all over the world have been able to truly rival Silicon Valley, although some countries or regions may have gained significant leadership and success in certain areas, such as semiconductors for Taiwan.

For China in particular, the second largest technology producer and market in the world, its main tech centers of Beijing, Shenzhen, and Shanghai, and other hubs such as Hangzhou and Chengdu, are very much the creation of government policies, directives and financial support. This of course can be expected as the norm in a country like China, with the planned economy nature of its government. While these Chinese tech hubs have been able to take advantage of China’s enormous domestic market in the last few decades, they simply cannot come close to the international reach and global influence of Silicon Valley. Their fates continue to be highly susceptible to manipulation from government policies, such as the Chinese government’s crackdown on the tech sector in the last two years, directly leading to the severe downturn for the entire tech sector in China.

In recent years, with soaring costs in California, other tech hubs have indeed gained grounds in the United States, such as the Austin, Texas, and Seattle, Washington, areas. But so far, no other location has been able to match Silicon Valley’s eminence in terms of scale, depth, breadth, or scope – whether in the U.S. or abroad.

Despite that history, last week, the Biden administration announced a $500 million tech hub funding scheme (formally known as the Regional Technology and Innovation Hub Program). As part of the $10 billion CHIPS and Science Act, the program sets a goal of identifying about 20 U.S. cities or regions as prospective tech hubs, and eventually selecting 10 for funding. The obvious question is: Can the U.S. succeed where so many have largely failed? Indeed, the broader question that has been asked and debated by many since the passage of the CHIPS and Science Act is how to make sure that a return to government industrial policy provides the right answers to the global challenges faced by the U.S. in terms of geopolitics and competition, particularly with China.

To support the new tech hubs, the Biden administration’s scheme aims to bring together “industry, higher education institutions, state and local governments, economic development organizations, and labor and workforce partners to supercharge ecosystems of innovation for technologies that are essential to our economic and national security.” Each applicant region must focus on one of the 10 key tech areas identified in the tech hub statute: artificial intelligence, high performance computing and semiconductors, quantum technology, robotics, natural and anthropogenic disaster handling, advanced communications, biotechnology, data management and cybersecurity, energy technology, and advanced materials science.

The $500 million authorization of this fund is actually relatively small, even though the administration has committed to seeking further appropriation from Congress in the next two years. But the modest financial incentive may be a blessing in disguise. While sustained and long-term policy consistency is crucial, on the other hand, no local or state governments, private companies or even universities should be lured to the scheme just because they see a big check being handed out. Every participant – private or public – in the partnership must be committed to invest with its own resources.

Compared with other countries, the United States enjoys one particularly important advantage – having many outstanding teaching and research universities across the nation that can serve as anchors for tech hubs in conducting research, training talents, and acting as the bases for technology transfer and incubating new startups. Already, several recent examples showcase the viability and vibrancy of even the existing regional private-public-academic collaboration. In Arizona, TSMC’s new facility has a partnership with Arizona State University. In Ohio, Intel’s “Silicon Heartland” project includes a role played by The Ohio State University. In Indiana, U.S. foundry SkyWater Technology moved to an industrial park affiliated with Purdue University.

In addition, community colleges are increasingly enlisted in an effort to train an even broader base of skilled workers, with the support from tech enterprises, to supply them with skilled manpower to fill the new jobs created, which of course will be also welcomed by state and local governments.

So, whether the United States can duplicate Silicon Valley in one or more new locations may be the wrong question to ask. There are some success stories that market and natural forces can create through sheer luck, and others fostered by dedicated, targeted nationwide efforts, with the right mix of ingredients of policy, innovation, investment, and resources. Each tech hub will not need to do everything, but must do enough to maintain and extend U.S. global tech competitiveness in its focus area, meanwhile fostering more regional economic equity.

As U.S. Commerce Secretary Gina Raimondo said, “You shouldn’t have to move to Silicon Valley if you’re a scientist with a great idea.”

Published: The Diplomat, May 18, 2023

Tuesday, May 09, 2023

[Diplomat] G7 Digital Ministers Preview Summit’s Focus on Tech Competition With China

G7 Digital Ministers Preview Summit’s Focus on Tech Competition With China

The G-7 digital and tech ministers’ gathering in Takasaki, Japan, offers hints as to the group’s priorities.

The leaders of the G-7 nations and the European Union gather in Hiroshima, Japan, starting on May 19. But their summit is being preceded by a series of ministerial meetings in various picturesque cities in Japan to lay the groundwork on a number of important topical issues. As the current cold war atmosphere between the U.S.-led Western allies and China centers around technology competition, the G-7 digital and tech ministers’ gathering in Takasaki, Gunma Prefecture, in late April took on special importance.

With relatively little fanfare, a Ministerial Declaration was issued with six sections, identifying the areas where these leading Western democratic nations are focusing their efforts as they try to sustain technological leadership. That leadership is widely considered to be under threat from global geopolitical tensions and in particular, competition from China.

The first of these six points, “facilitation of cross-border data flows and data free flow with trust,” reaffirms the importance of building and realizing trust “through various legal and voluntary frameworks, guidelines, standards, technologies and other means that are transparent and protect data.” The ministers recognized the need to accelerate progress in this regard by establishing and launching the Institutional Arrangement for Partnership (IAP), “to bring governments and stakeholders together to operationalize ‘data free flow with trust’ (DFFT) through principles-based, solutions-oriented, evidence-based, multistakeholder and cross-sectoral cooperation.” The declaration set a goal of launching the IAP “in the coming months.”

The second point, “secure and resilient digital infrastructure,” is also clearly an area that has been drawing heightened concern recently, with growing geopolitical concerns over redundancy in face of potential disruptions. The digital ministers affirmed the important need to “develop, deploy and maintain various multi-layered networks consisting of terrestrial networks, submarine cable networks, and non-terrestrial networks.” The declaration calls for extending “secure and resilient digital infrastructure to like-minded partners, including developing and emerging economies.”

The ministers paid particular attention to the need to extend secure routes of submarine cables. In particular, the G-7 governments will work with the World Bank and the private sector telecom operators to undertake submarine cable projects with subsidies from G-7 nations and other international institutions. The goal is to support the critical infrastructure development of underserved regions in the world that have not received sufficient private investment. Specifically, Japan has committed to host “an event and identify concrete areas of cooperation with the World Bank in 2023 to accelerate the strengthening of synergies between the G-7 and the Bank.”`

Recent media investigative reports have pointed out that China’s Belt and Road Initiative (BRI) has been pivoting from large-scale infrastructure projects to less capital-intensive areas], particularly in the field of digital infrastructure. Examples includes constructing a new government data center for Senegal, supported by Huawei, which also spearheaded another undersea cable project for Senegal with the island nation of Cape Verde, making Senegal an African regional cable hub. Previously commonly labeled as the “Digital Silk Road” strategy, such investments in information and communications technology (ICT) and electronic components reached $17.6 billion in 2022, six times the amount in 2013, when the BRI was launched, according to reports from Nikkei Asia and the Financial Times’s fDi Markets foreign direct investment monitor. The United States and its partners will have a lot of catching up to do.

The third point in the G-7 declaration, “internet governance,” echoes the expressed endorsement in the U.S.-led Declaration for the Future of the Internet for the multistakeholder model, which is seen as being challenged by China, Russia and other autocratic nations that hope to steerinternet governance toward a government-driven, top-down model. The forth point, “emerging and disruptive technologies in innovating society and economy,” is, however, just a pledge of support for cooperation in policy setting for a mixed bag of different technologies, from Internet of Things to digital identity, and from semiconductor supply chain to the metaverse.

The fifth point specifically focused on “responsible AI and global AI governance,” reaffirming that AI policies and regulations should be “human centric and based on democratic values, including protection of human rights and fundamental freedoms and the protection of privacy and personal data.” However, the meeting only concluded with an “action plan for promoting global interoperability between tools for trustworthy AI,” with little concrete agreement on how to deal with the growing concerns over the untamed development and proliferation of generative AI.

Interestingly, the final point, “digital competition,” is an acknowledgement of the tensions between G-7 nations, particularly across the Atlantic, between the United States and Europe, over the wide gap in regulatory principles and laws overseeing the competition in digital markets. The meeting agreed to convene a summit on digital competition for regulators and policymakers in the fall of 2023 to facilitate promotion of competition and enforcement.

Further to these discussions, on May 12-14, the G-7 science ministers will gather in Sendai, Japan, to discuss cooperation on scientific research, funding transparency, research data sharing on sensitive technologies, etc.

All in all, as the United States has unveiled international economic policy, through cooperation with its partners, with its centerpiece focusing on technological competition with China, it can be expected that the G-7 will play a crucial role in establishing and pursuing a more coherent strategy on multiple fronts. The G-7 digital and tech ministers’ declaration offers hints to the priorities and approaches of the allies, as well as how it may engage the other advanced as well as emerging economies, such as those outside of the G-7 that are strategically invited to the upcoming summit like Australia, Brazil, India, South Korea, and Vietnam. It should not surprise anyone that technology competition will be a key center of attention and actions in Hiroshima.

Published: The Diplomat, May 9, 2023