U.S. efforts to persuade allies of the security threat posed by Huawei secured an important victory recently with the United Kingdom’s decision to ban the Chinese telecommunications giant from its 5G network. The UK’s anti-Huawei policy, announced only two weeks after India became the first country to ban the Chinese video-sharing platform TikTok and 58 other Chinese apps, might appear to signal that the tide is turning against China’s global technological ambitions. More quietly, however, Chinese startups continue to find success abroad. 

Over the past decade, Beijing has led a concerted push for its investors as well as its most innovative technology startups to penetrate emerging markets and to operate at an increasingly global scale. Developing countries have emerged as destinations of choice for Chinese entrepreneurs looking to take their craft abroad. Today, there are more than 10,000 Chinese firms, most of them privately owned, operating across Africa. Chinese startups such as Hikvision and CloudWalk have gained notoriety by building facial and voice recognition security systems in South Africa and Zimbabwe, respectively. 

Southeast Asia, with its youthful demographics, fast-growing economies, and geopolitical flashpoints, is also quickly emerging as a focal point of China’s digital ambitions. Emergent technology companies in the region are increasingly bound to Chinese investors for patronage, as Chinese investment in Southeast Asian startups exploded in 2019, increasing eightfold over the course of a year to $1.78 billion. Meanwhile, China’s technology champions are well-positioned to promote the use of their apps and platforms to shape the day-to-day affairs of local populations. Seven of the 10 leading short video and live-streaming applications in the region, as measured by revenue, are developed by Chinese companies. 

China’s “expeditionary” entrepreneurs have been buoyed by a nationwide shift toward outbound capital in their efforts to penetrate emerging markets. The country’s non-financial outbound investments surged from $5.5 billion in 2004 to more than $170 billion in 2016, while major Chinese venture capital groups are becoming instrumental players in strategically important emerging markets. Additionally, the founding of the Shanghai “STAR Market,” established as an equivalent to Nasdaq in the summer of 2019, has empowered Chinese startups operating initially at a loss to be funded and traded in public markets for the first time in the country’s history. The new IPO mechanism helped the Chinese startup Transsion emerge as the top smartphone seller in Africa and also helped the Chinese browser and app Opera gain a foothold in Nigeria as a leading “super app,” which nests a full suite of functions under a single interface. 

To be sure, not all Chinese entrepreneurs taking their startups abroad have ties to or directly serve the interests of the Chinese Communist Party. Indeed, some seek opportunities abroad in search of less cumbersome regulatory environments and increased trade space amid an increasingly cutthroat domestic digital market. 

Nonetheless, they serve as de facto technology ambassadors for China, as their presence advances Beijing’s narrative of its ascendency in the technology domain and helps orient local digital ecosystems toward China. Chinese entrepreneurs are more likely to build products and systems that leverage existing digital platforms as part of China’s Digital Silk Road, particularly through hoarding data for commercial advantage. For example, in March of 2018, the Guangzhou-based CloudWalk partnered with the Zimbabwe government — backed by Belt and Road financing — to launch a large-scale facial recognition program for purported domestic security purposes. The arrangement, which some have termed “data colonialism,” would funnel massive amounts of data to Chinese AI technologists and improve their capabilities to tailor and refine algorithms for commercial gain. Chinese AI systems, developed using the massive amounts of surveillance data collected by the Chinese government, are being further fueled by information gathered through a repressive security system in Zimbabwe. 

Amid the Covid-19 pandemic, China is now poised to use its so-called “Health Silk Road” — which seeks to promote China’s high-tech healthcare model to Belt and Road countries — to increase its leverage over developing countries under the guise of distributing global public goods. Leading surveillance startups like the Hangzhou-based company Rokid, for example, are angling to sell thermal imaging glasses to countries around the world in order to track body temperatures and screen for symptoms of infection. Similarly, Chinese tech companies Hikvision and Dahua, which are both the subjects of U.S. sanctions for their role in human rights abuses in Xinjiang, have opportunistically pitched their latest products — such as thermal vision cameras, thermal-detection enabled metal detectors, and even a thermal screening mobile app — to countries scrambling to contain the outbreak, including Argentina, Jamaica, and even U.S. technology giant Amazon. 

But while these efforts seek to cement perceptions that China is a leader in solving the world’s most pressing problems, they are still surveillance infrastructure — thermal imaging, for example, can be used to collect and store biometric data — thus allowing Chinese technology companies to mine large quantities of foreign data that would then enable them to even more effectively target consumers.

These trends, accelerated by the pandemic, highlight how China may continue to shape the digital development pathways of emerging economies around the world. Where U.S. technology firms decline to compete, they will cede ground largely to Chinese companies. And once based in these developing countries, Chinese entrepreneurs are then well-positioned to develop new digital products and services tailored to local markets, as compared to American companies that are operating from a distance. This provides China’s technology companies a stronger foothold, opens the door to widespread data collection, and sets the table for greater repression and social control in countries with little resilience to creeping authoritarianism. 

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