Digital Silk Road

Via The Economist, a short brief on BeiDou, China’s rival to GPS:

Over 2,000 years ago the Silk Road carried goods, services and ideas across the Eurasian continent. In 2013 President Xi Jinping revived this ancient endeavour, with the aim of linking China with Asia, Africa, eastern Europe, Russia and the Middle East. His “belt-and-road” initiative (overland and maritime respectively) involves ambitious plans for ­infrastructure.

In 2018 the new Silk Road will get a digital dimension. China will extend coverage of its home-grown satellite-navigation system to the 60-plus countries along the belt and road. By 2020 China aims to compete directly with America’s Global Positioning System (GPS), and expand its services globally with a network of 35 satellites.

By the start of 2018 what China is calling BeiDou (its term for the Big Dipper) will have nearly 30 satellites, narrowing its accuracy to well below ten metres. That still leaves it behind GPS, which can pinpoint positions to a metre or less. But it is catching up and aims eventually to surge ahead.

Improvements mean faster, more efficient broadcasting. Navigation services will also get a boost. And BeiDou connects the unconnected. The UN says that 62% of people in the Asia-Pacific region are not currently online. Expanding coverage will be costly. In addition to over $1trn in planned belt and road investments, China is spending an estimated $25bn on BeiDou. 

More than 30 countries have signed agreements to embed BeiDou domestically. Many authorise China to build ground stations, which improve BeiDou’s accuracy and reliability. On top of this, China has a three-year plan to invest in information infrastructure projects worth a combined $174bn, including the development of fibre-optic cables for high-speed internet.

Already, more than 150m Chinese smartphones, or 20% of the market, are equipped with BeiDou, and over 40,000 fishing vessels use it to communicate. Some 20m bicycles and motorcycles employ its positioning services. BeiDou-enabled services were worth more than $25bn in 2015; this is expected to double by 2020. A sub-industry of BeiDou-compatible chips, antennas and products aimed at the mass market has also formed. 

Economic development is only part of the point. BeiDou, which is under military control, enables China to end its dependence on America’s GPS. Now China can deploy BeiDou-guided conventional strike weapons. As well as autonomy, the system brings the prestige of fielding one of the world’s four global navigation satellite systems (Europe, America and Russia manage the other three). 

Critics worry about two things. China’s secrecy is a concern, especially when something goes wrong with the satellites. And, as with the rest of the belt-and-road initiative, China’s lopsided assumption of financial risk could cause problems if the returns are lacklustre. 

Still, the government is committed to the plan. As the Chinese proverb goes, “If you want to get rich, first build a road.” In 2018, that means a digital highway, too.

 



This entry was posted on Saturday, December 2nd, 2017 at 6:42 pm and is filed under China, New Silk Road.  You can follow any responses to this entry through the RSS 2.0 feed.  You can leave a response, or trackback from your own site. 

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Wildcats & Black Sheep is a personal interest blog dedicated to the identification and evaluation of maverick investment opportunities arising in frontier - and, what some may consider to be, “rogue” or “black sheep” - markets around the world.

Focusing primarily on The New Seven Sisters - the largely state owned petroleum companies from the emerging world that have become key players in the oil & gas industry as identified by Carola Hoyos, Chief Energy Correspondent for The Financial Times - but spanning other nascent opportunities around the globe that may hold potential in the years ahead, Wildcats & Black Sheep is a place for the adventurous to contemplate & evaluate the emerging markets of tomorrow.