China’s increasing dominance in a range of growing technologies poses an increasing threat to Australia, we’ve been warned.
China’s increasing dominance in smart cars, home devices and other “internet-of-things” technologies poses a growing risk to Australia’s economy, a new report warns.
There were an estimated 12 billion “intelligent” internet-connected devices worldwide last year, and that figure could be 125 billion by the end of the decade.
The world is being transformed by the internet of things (IoT), which encompasses everything from “smart home” appliances fitted with sensors, to connected electric vehicles like the Tesla, to metro-scale “smart city” networks linked by CCTV, phone location tracking and facial recognition.
Privacy experts have long raised concerns about the vulnerability of IoT devices to hacking, but the report by the Sydney-based Lowy Institute highlights the broader threat posed by China.
While Australia and the United States have sought to exclude Chinese state actors such as Huawei from sensitive digital networks, many countries in East and Southeast Asia are becoming more increasingly integrated with China through evolving IoT ecosystems and supply chains, according to the report.
China has “major advantages” in the sector “given its centrality in global electronics manufacturing, capabilities in software and electronics design, and enormous fast-growing markets for digitally enabled products and services,” it notes.
As countries in the region such as Singapore and Malaysia deepen their integration with China through “smart city” ecosystems, “exposure through these ecosystems to Chinese actors and therefore Chinese state power will increasingly become the price of access to the wider regional economy”.
“As powerful governments set the ‘terms of engagement’ for participating in transnational technological ecosystems, ‘technology takers’ will be disadvantaged,” writes report author John Lee.
“In response, Australia will need to build up its own technological capacities and find innovative ways to manage, rather than avoid, the risks implied by rising digital connections with China.”
The report notes that since last year, the ruling Communist Party has been rapidly tightening its grip on private sector companies, both domestic and foreign, involved in China-integrated IoT ecosystems.
“In total, this regime gives Chinese authorities the option to access almost all data on Chinese networks, including that generated or held by foreign actors,” Mr Lee writes.
China is also seeking to exert influence over data transfers that occur outside of its borders, but relate to Chinese interests.
“The East and Southeast Asian region is Australia’s neighbourhood and best source of future economic opportunity,” the report says.
“The measures seen to date from Washington and like-minded partners are unlikely to stem the growth of transregional IoT ecosystems in which China is deeply embedded, and which are therefore exposed to Chinese state power in terms of both economic leverage and risk of digitally enabled espionage or sabotage.”
Australia may therefore be forced to choose “between a poorer future outside a region digitally connected with China and a riskier future within it”.