The debate is about the growth of the digital economy. Or, more precisely, it is a struggle to determine which standards will be adopted in AI, advanced computing, digital payment platforms, and other aspects of the digital ecosystem.
On one side are the Americans and their allies, who regard almost everything developed in China as a security risk or an economic challenge. This ranges from cars and phones to householder cleaning robots. They will simply not work with China. On the other side is China, which offers the most advanced digital applications worldwide. China is happy to work with everybody to develop and refine common standards.
Early in 2025, China hosted a global conference to discuss these issues and develop standards for AI. The US refused to attend. Later in the year, the UK hosted a similar world conference but refused to invite China to participate.
Make no mistake, this intransience will impact trade and business, particularly in our region.
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Some participants in the Asean discussions on digital enhancement have already concluded that the inevitable outcome is two separate, and likely largely incompatible, standards. This result will cripple the rapid advancement of the digital economy and hinder any efficiencies in productivity that would come from a single cooperative standard.
This impacts digital development and uptake. It also impacts the physical world of business, consumer electronics and other products.
The US is already concerned that China built and equipped container cranes in US ports, which are acting as spies. They are concerned that ubiquitous CCTV cameras also transmit data to China, which they regard as yet another security threat.
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More recently, they have promoted the claim that China has installed a “kill switch” in electric vehicles and buses. However, they conveniently ignored the fact that such “kill” switches apply to software installed in cars and heavy plant equipment manufactured in the US and Europe.
So what are the potential consequences for business? Does this mean that US shipping, or ships supplying the US, will not be permitted to dock at ports that use China-manufactured container cranes? Sounds outlandish, but it’s already happening in some ports in the US where port authorities have been directed to stop using these cranes.
Does it mean that US companies will not rent office space where China-manufactured CCTV is installed? These cameras have already been removed from a range of Government-owned and leased sites in the UK, Australia and the US. Pressure has been applied to those doing business with the government to also remove these CCTV cameras.
Concerns about espionage have also been raised regarding certain international events at which officials travelled in BYD vehicles. Don’t talk, don’t use phones and turn off your phones, some delegates were instructed by their security services.
A lack of agreement on standards is not limited to software and AI. Simple things, such as different-shaped and incompatible charging ports for EVs or phones, drag down productivity and hinder digital advances. The adoption of different standards can also be used as a tool of economic coercion to whittle down market share.
China has introduced GPMI, a single cable designed to replace USB, HDMI, audio and internet connectivity. The cable handles data, video, and power at 192 gigabits per second and uses a new connector for top performance. If your device is not compatible with this new connector, then your productivity lags. If your new product does not accommodate this new plug configuration, you lose market share. Creating a product that takes the new plug, and also a product that uses the old plug, duplicates production and eats into profits and business flexibility.
These issues are already impacting which business can provide transport for government delegations, what office space is available and how cross-border trade settlement is enabled. Businesses can find their options limited by the products and operating systems that they choose to work with or manufacture. Businesses can be facilitated or hampered by the choice of payment systems for cross-border transactions.
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Singapore and China have agreed to a pilot scheme to let Singaporean tourists use digital renminbi in China. The Singapore branches of the Industrial and Commercial Bank of China and the Bank of China will roll out the pilot in phases, enabling customers to open and top up digital renminbi wallets. This is possible only because of an agreement on digital standards.
The issue of digital standards and compatibility is not an esoteric discussion. Chambers of commerce and businesses need to be more actively involved in these currently sotto voce Asean discussions. The future of open, efficient and productive trade depends on it.
Daryl Guppy is an international financial technical analysis expert. He has provided weekly Shanghai Index analysis for mainland Chinese media for two decades. Guppy appears regularly on CNBC Asia and is known as “The Chart Man”. He is a former national board member of the Australia China Business Council
