The Case for a US-South Korea Digital Alliance in Southeast Asia

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The Case for a US-South Korea Digital Alliance in Southeast Asia

South Korea looms as an ideal partner for the U.S. in its efforts to check China’s dominance of the digital domain.

The Case for a US-South Korea Digital Alliance in Southeast Asia
Credit: Depositphotos

Southeast Asia is accelerating its digital transformation. During the COVID-19 pandemic, the region has seen an unprecedented use of digital services, such as mobile tracing, telemedicine, video/online chat, and e-commerce. China is seeking dominance in the digital transformation of the region, which will increase Southeast Asian countries’ economic and technological dependencies on China, as well as potentially render them vulnerable to Chinese cyber-espionage and surveillance. These sorts of efforts could help Beijing expand its sphere of influence in the Asia-Pacific region, while simultaneously limiting U.S. influence. However, by partnering with South Korea, Washington’s longtime ally and an advanced digital technology and equipment provider, the two countries could work together to counter China’s digital dominance in Southeast Asia.

Fifth generation or 5G mobile networks are at the forefront of Southeast Asia’s digital transformation. Such networks provide faster connection speeds, low latency, and more bandwidth, making digital communication more seamless than the previous generation of networks. 5G is also revolutionary because it will enable a wide range of new digital applications, such as the internet of things, smart cities, self-driving cars, and robotic appliances. Combined with the development of artificial intelligence technologies, there is enormous potential for the digital transformation of the economies in the region. Given these prospects, many Southeast Asian telecommunication providers have already developed 5G policies and selected 5G equipment providers. Singapore aims to achieve its nationwide 5G coverage by 2025. Thailand’s mobile operator, Advanced Info Service (AIS), launched its 5G service in hospitals across the country to assist with telemedicine services. Recently, Malaysia initiated a digital masterplan to accelerate its transition toward 5G technology.

The leading player in the digital transformation of Southeast Asia is China. China is pursuing exports of its digital technologies and infrastructure, dubbed the “Digital Silk Road,” which President Xi Jinping described in 2019 as a priority for the Belt and Road Initiative (BRI). Last year, the Chinese Communist Party’s leadership called for the expansion of 5G both within China and abroad as an important part of post-pandemic economic recovery, and Southeast Asia is an important part of the Digital Silk Road. China is laying fiber-optic cables in Southeast Asia. It is also exporting its mobile payment services, such as WeChat Pay and Alipay, to Internet users in the region, many of whom do not have full access to financial services.

In addition, China is cooperating with Southeast Asian countries to build “smart cities,” which employ digital technology and data to improve the quality of life. Finally, China dominates the 5G networks equipment markets in Southeast Asia, as its 5G equipment is much cheaper than its main competitors. Two Chinese firms, Huawei and ZTE, which hold almost half the global 5G equipment market share (followed by Ericsson, Nokia and Samsung), are expanding their share in Southeast Asia. Many countries in the region, such as Indonesia, Malaysia, the Philippines, Cambodia, and Myanmar, are already using or planning to use Chinese 5G networks.

China’s increasing global dominance in the 5G equipment market and digital transformation of Southeast Asia will make countries in the region vulnerable to Chinese influence. If its past behavior is any indication, Beijing will try to leverage its dominance in the digital transformation of Southeast Asia to political ends. In smart cities, for example, as digital infrastructure increasingly encroaches upon daily life, controlling everything from traffic lights to self-driving cars and checkouts at stores, China could threaten network shutdowns with disastrous consequences in countries that do not accede to its demands.

There are numerous recent examples of Beijing wielding its economic clout for geopolitical purposes. In the wake of the deployment of the U.S.’ THAAD missile defense system on South Korean soil in 2016, China punished South Korea by shutting down the latter’s retail stores located in China, banning tour groups from visiting South Korea, and removing South Korean TV shows from the Chinese internet. Likewise, after Australia called for an independent investigation into the origins of the COVID-19 pandemic, China sanctioned Australia’s wine industry. Countries that depend upon Chinese digital infrastructure will be even more vulnerable to China’s bullying.

In addition, China’s digital dominance will make countries in the region vulnerable to China’s cyber espionage and surveillance. Experts have warned that Chinese manufacturers have built back door vulnerabilities into network equipment in order to infiltrate foreign companies and enable espionage. China’s Cyber Security Law and National Intelligence Law obligate all Chinese organizations and citizens to support China’s national intelligence activities, and so there is little distinction between the Chinese government and private industry when it comes to cybersecurity. The head of Huawei previously served as an engineer in the People’s Liberation Army, and an employee of the company was arrested in Poland in 2019 on charges of spying, adding to these concerns. Cyberattacks are another worry. Chinese hackers have reportedly planted malicious code in critical foreign infrastructure that can be activated during a potential conflict.

As these countries become more dependent on China economically and technologically, as well as more susceptible to China’s cyberattacks and surveillance, China’s influence over the region will only grow vis-à-vis that of the United States. Over time, Southeast Asian countries will be pressured to refrain from cooperating with Washington in the security realm, undermining U.S. power projection capabilities in the region. This will help China realize its ambition to expand its sphere of influence in the Asia-Pacific free from U.S. interference, endangering U.S. interests and those of its allies and partners in the region.

Washington has pressured its partners in Southeast Asia to avoid 5G equipment made by Huawei and ZTE. However, this approach has limitations. Without an alternative for the increasing demand for 5G and other digital infrastructure and technologies, Southeast Asian countries will have little choice but to use Chinese providers. A more constructive approach would be for the U.S. and like-minded countries to incentivize competition in the Southeast Asian market. Although the U.S. is advanced in 5G baseband chips and other digital technologies, it lacks a domestic manufacturer that can rival the Chinese 5G equipment companies.

However, the U.S. can partner with foreign firms to challenge China’s dominance. South Korea would be an ideal partner for the U.S. in its efforts to check China’s dominance in the digital transformation of Southeast Asia. South Korea and the U.S. have been trusted allies for seven decades. They have cooperated in various fields, including sensitive military/security matters. When it comes to 5G equipment, Samsung is well-positioned since its plants are located in South Korea and India. The other major non-Chinese 5G equipment manufacturers, Ericsson and Nokia, have significant manufacturing operations in China, which makes them vulnerable to Beijing’s sanctions. Additionally, Samsung long ago won Pentagon clearance for government use of its devices equipped with its proprietary Knox security software, which is trusted by the U.S. military for safeguarding sensitive phone data.

Moreover, Southeast Asian consumers generally have favorable views towards South Korean firms in the digital field. South Korea has not entered the Southeast Asian 5G market yet, but a survey report on the 2020 State of Southeast Asia suggests that Samsung was ranked the most preferable partner in building 5G infrastructure in the majority of the ten Southeast Asian countries. Finally, with the rising popularity of Korean pop culture and consumer products in Southeast Asia, South Korea is enjoying a spike in soft power, giving South Korean firms a competitive edge over China.

From South Korea’s perspective, cooperation with the U.S. in the Southeast Asian 5G market would further South Korea’s New Southern Policy, which aims to deepen South Korea’s partnerships with Southeast Asian and South Asian countries. The policy aims to diversify its diplomatic relations, which heretofore have been focused on just four major powers (the U.S., China, Japan and Russia), as well as to alleviate its own economic dependence on China. Entering the 5G equipment market in Southeast Asia would not only help South Korea enhance its presence in the region, but also diversify its economic interests away from China, leaving it less susceptible to Chinese sanctions.

South Korea would benefit from U.S. companies’ advanced digital technologies, including microchips, software and operating systems, self-driving vehicle technology, and satellite-based technologies. It would also benefit from Washington’s existing partnerships with countries in Southeast Asia, which include decades of economic and military assistance. By combining forces, the U.S. and South Korea can jointly finance projects in Southeast Asia that match China’s lavish financing. They have a better chance together to check China’s growing digital influence that will eventually pressure Southeast Asian countries to downgrade their relations with the United States.