The United States and its allies should strengthen their investments in Asia’s digital economy to counter China’s increasing presence in the region, experts from the US and Japan have said.

The comments, made during a discussion titled “China’s Digital Silk Road” at the Centre for Strategic and International Studies in Washington on Tuesday, were the latest sign of the growing vigilance against China’s overseas technology investments.

Also Read: The online Silk Road: China’s growing influence on tech in the UAE.

In 2015, China outlined the digital dimensions in its Belt and Road Initiative (BRI), Chinese President Xi Jinping’s signature programme to create economic ties with nations in Asia, Europe and Africa.

In addition to the building of infrastructure and energy projects along inland and marine trade routes, Beijing proposed setting up intercontinental underwater optical cables and improving satellite information networks to further cement those ties with other developing nations.

To respond to China’s ambitions in digital development, “we should fight for every scrap of the global market share in advanced technology industries”, said Robert Atkinson, president of the Information Technology and Innovation Foundation.

“I don’t think in 10 years it is by default that Chinese will dominate the region from the digital perspective,” Atkinson said, before adding that “if we don’t change the course, then yes, I believe they will dominate”.

Among China’s overseas digital projects is a 6,200km (3,852-mile) underwater cable connecting Pakistan and Djibouti that is currently being built by Huawei Marine Networks, a joint venture between Huawei Technologies, China’s leading maker of smartphones and other telecoms equipment and Global Marine Systems of Britain.

As questions are raised about ‘belt and road’, projects slow in Southeast Asia. The project is expected to complete construction in the fourth quarter of this year and is scheduled to extend to Europe in the years to follow.

Other big technology companies in China have also started to provide big data and cloud computing services for some Southeast Asian cities, as well as holding equity stakes in local big tech companies, which have given Chinese firms “outstanding opportunities and capabilities of collecting a wide range of data”, said Hirobumi Kayama, an adviser to Japan’s Ministry of Economy, Trade and Industry.

“The funding power of Chinese entities is not the only strength for China any longer. The US and Japan must face up to this reality,” he said, noting that Japan, a long-time infrastructural and industrial investor in Southeast Asia, is seeing rising competition from China.

Now in its sixth year, BRI is also drawing criticism for the lack of transparency in its projects’ financing, its potential for corruption, and the worsening of the debt load the host countries must carry.

And suspicions are rising in Southeast Asia’s technology sector that Beijing is using Chinese companies for possible overseas espionage activities – echoing similar concerns by the US and several European Union countries, and creating an opportunity for American and Japanese projects.

China’s restriction of cross-border data flows has raised foreign companies’ concerns about their data leakage or possible misuses. Kayama recalled one business executive with an AI firm in a Southeast Asian country acknowledging that his company wanted to avoid sharing data about its clients and business with “a big Asian nation”.

“So there are real needs in the emerging Asia for active participation of the US & Japanese companies in digital transformation and their cooperation with local IT platforms,” Kayama said.

US warns allies not to buy ‘untrusted’ Chinese equipment for 5G networks

He called for expanding Japan-US cooperation in developing the Southeast Asian digital economy, in addition to infrastructure and energy projects in the Indo-Pacific area. The US launched what it calls an Indo-Pacific Strategy last year to seek close cooperation with its allies and counter China’s growing geopolitical influence there.

“We believe that the US and Japan should work together in expanding our investment in Asian digital business and facilitating free and open innovation,” Kayama said.

The growing national security concerns may have posed a bleak outlook for further market access of Chinese telecoms companies. In the latest example, last month, the US announced criminal charges against Huawei including spying for Beijing, and pressured its allies to deny Huawei’s market entry into 5G, the next generation of communications.

William Mayville, a former deputy commander with the US Cyber Command, a division of the Pentagon concerned with digital operations and expertise, said that Huawei and ZTE, another Chinese telecoms giant which drew severe US sanctions last year, had helped to expose the cybersecurity risks facing the US.

“Economically what it does is erode competitiveness in other markets & prevent emerging economies’ opportunities to participate in the global community,” Mayville said of the Chinese cybersecurity threat.

China ramps up global coverage for Beidou satellite system. He also sounded an alert about China’s Beidou satellite navigation system. China announced on December 27 that Beidou would start providing global positioning services, in a bid to compete with the US’ GPS and EU’s Galileo. It has already covered 30 countries involved in belt and road projects, and plans call for further expansion.

To Mayville, that’s just another platform to match up against China, “particularly when China has already demonstrated its willingness to militarise space.

“The sensors to enhance guidance, the tools it uses, in additional to everything it’s doing in the cyber domain, is problematic.”