A China-First Approach to Digital Policy Making

The digital world is presently marked by an exceptional contradiction. On the one hand, a digital and interconnected world necessitates various forms of global governance. Global agreements, institutions and frameworks are what enable the free flow of information, capital, and resources across borders. Moreover, global institutions are essential for crisis management in an interconnected world as a crisis in one world region sends immediate ripple effects across the globe. Finally, interconnectedness gives rise to issues of global concern ranging from the environment to migration and crime. On the other hand, the digital and interconnected world is increasingly marked by political and social movements that rebuke global governance and see it as a form of evil. Populist and nationalist leaders in Europe and the Americas promise to resurrect a bygone era of state sovereignty while advocating a narrow world view in which national interests trump global concerns.  

Attacks on the institutions and frameworks of global governance complicate the work of diplomats. Nationalist and populist leaders despise the middle ground and reject any form of compromise. Yet diplomacy resides in the middle ground and is contingent on compromises. Moreover, nationalist and populist leaders delegitimize global governance institutions and depict them as part of a global cabal looking to eradicate national cultures and identities. As these institutions lose legitimacy, they also grow ineffective. This has been the case with the UN, the OSCE or the Organization for the Prohibition of Chemical Weapons. Yet it is exactly these institutions which create a forum where diplomats can meet to address shared challenges.  

This tension is only expected to intensify as a new wave of digital technologies reshapes our daily lives. Advances in virtual reality, computer-brain interfaces, and artificial intelligence (AI) will all require new global frameworks, accords, and agreements. Yet the rapid digitalization brought about by virtual reality and AI will only kindle the flames of nationalism and populism. As a new, and unfamiliar digital world emerges, more and more voters will look to leaders who promise to restore the familiar world of state sovereignty. Two technologies that best illustrate the renewed need for global governance are the Metaverse and Generative AI.

No one is quite sure what the Metaverse will look like. What is certain is that advances in virtual reality and computer-brain interfaces will create a new and immersive digital environment in which people will interact with one another. Unlike existing virtual worlds, such as Second Life, the Metaverse is expected to create a Meta-economy. Users of the Metaverse will be able to purchase goods and products. In its early stages the Metaverse may be populated by avatars and users will be able to purchase clothes for their avatars while using avatars to visit virtual museums or view films in virtual cinemas.

As the Metaverse becomes more sophisticated thanks to computer brain interfaces, users may purchase homes in the Metaverse, rent hotel rooms or even visit digital stores to purchase goods consumed within or outside the Metaverse. What is certain is that the Meta-economy will require new frameworks and agreements for global financial transactions. If one purchases a home in the Metaverse, will they pay a digital property tax? If so, which country will benefit from this tax? Will Metaverse purchases be tax detectable in the physical world? And what about profits generated in the Metaverse? Will they be taxed? And if so, by whom? Finally, new digital banking systems will be required for seamless financial transactions within the Metaverse- a global digital world devoid of national borders.

Generative AI such as ChatGPT presents a very different set of challenges. For instance, Generative AI will likely necessitate new accords regarding intellectual property rights. If ChatGPT generates texts based on materials uploaded to the internet by individuals, will these individuals earn royalties? If so, who will pay these royalties and where?  Moreover, Generative AI will demand global accords that ensure the ethical development of artificial intelligence, while clearly outlining how states may or may not use Generative AI.

For instance, international accords may ban Generative AI companies from accessing, gathering, and using confidential information such as consumer data. Similarly, states may decide to ban the use of Generative AI to create potent forms of disinformation such as Deepfake video and images. Lastly, agreements may prevent states from carrying out “data dumps” on the internet. “Data Dumps” may be strategically used by nations in an unregulated AI arms race. For instance, Western nations may “dump” onto the internet vast amounts of inaccurate information in Chinese. This would greatly harm Chinese AI companies whose tolls would be inaccurate having been based on incorrect information.

The question that comes to the fore is how will diplomats create new frameworks for global digital governance in a world prone to nationalism and a disdain for multilateralism? One solution may be to use existing global governance institutions to ratify agreements that are negotiated between blocks of states. For instance, an agreement on the ethical use of Deepfakes may first be negotiated between the EU and Russia. Next, China and the US may be invited to join the agreement and negotiations would focus on balancing the needs and interests of all four parties. Finally, all four signatories would jointly present this agreement at the UN where it could be ratified and given a global remit. In other words, an agreement signed by the EU, Russia, China, and the US may serve as a global framework that is then embraced by many nations. Similarly, a financial agreement regulating currency transactions in the Metaverse may first be negotiated between China and the US. Next, the EU and BRICS nations may be invited to join the agreement before its final ratification in the World Trade Organization.

This form of digital policy making will only be effective if it is predicated on a “China First” or “Russia First” approach. Indeed, digital agreements by like-minded countries are unlikely to become global frameworks as they fail to consider the interest, needs, and demands of non-like-minded countries. An AI agreement signed between EU nations will likely be rejected in part, or in full by China or Russia. Indeed, global governance of a digital world requires agreements and frameworks by non-like-minded countries. Moreover, to be effective, this form of digital policy making must take into account existing national frameworks. For instance, the past two years have seen an EU framework for AI development, an executive order by President Biden and regulatory safeguards implemented by China. These may all serve as the basis for a three-way agreement on AI between the EU, US and China, an agreement later promoted by all three at global governance institutions.   

What is most important for the future of digital policy making is that groups of nations form alliances through which they may impact digital frameworks and accords. For example, an agreement on financial transactions in the Metaverse between India and an alliance of African nations may also serve as a first step towards broader ratification. If countries fail to form these alliances they may once again be left out of the global policy making process.