With Myanmar’s port development in Kyauk Phyu as part of China’s Belt Road Initiative, local business and communities need to be aware of what lies beneath the surface. That awareness needs to encompass the technology and digital infrastructure being used to connect Myanmar to global trade routes.
Proper and thorough due diligence is required rather than taking the publicists and PR departments of their China partners at their word.
It is becoming increasingly important to strip away corporate layers and veneers when conducting business and trade with today’s China. This is necessary as the new China under Xi Jinping has taken away the separation of State and Economy or Civil Society. By trying to reverse China’s century of humiliation, the Chinese Communist Party (CCP) has been elevated to China’s central control and is pursuing a National Interest agenda.
When taking a deep dive look at what China is doing with regards to smart supply chains and trade, it is apparent that their digital leadership with regards to integrated smart port and logistics has slipped under the radar. China’s level of seamless data integration of their data sharing and exchange platforms within global supply chains and logistics is far wider than most in the maritime industry seem to appreciate. This raises questions around not just cyber-security but around data manipulation within global supply routes.
When looking at current smart port development, not many of the initiatives currently in play appear to know of China’s digital data aggregation platform. This platform is known as Logink and has been operational for over a decade. The platform is embedded within smart port ecosystems and sits under several State departments. This complex control structure has made it difficult for several ports to appreciate that are already docked into the Logink platform without realising that they are. In a sense, Logink is hidden at a basement four level and those outside of the China BRI network do not properly know what this platform does or how it is managed.
This development has gone largely under the radar, particularly as the data sharing exchange network has been subsumed into the BRI and Digital Silk Road (DSR) initiatives. The result of this lack of awareness has been a level of undetected big data leakage from smart port and supply chain ecosystems, particularly where those ecosystems overlap with BRI participating countries.
Does this deeply embedded data sharing network point to the emergence of a singular, closed digital trade system that elevates China to hegemon status? Is the lack of knowledge and understanding of China’s DSR ambition provide a digital back door for China’s closed digital network to replace the West’s open data exchange platforms?
The poor understanding of China’s current technology structure and ambitions becomes apparent when revieing the recent surge in maritime articles talking up Smart Ports, Cities, and Containers. Whilst they talk up the progress being made; they also showcase the increasingly growing divide between “West” open systems with that of China’s closed DSR structure. Not only is the debate between these differing digital ecosystems different in terms of content, but it is significantly different in terms of policy decision making.
However, what is of concern is that the “open” system advocates are unknowingly contributing to the creation of a single closed digital trade system by being docked into Logink.
The Digital Divide explained
Typically, the “West” talk in terms of data silos within an open system, gravitating towards data exchange across these silos. This includes getting to a level of data standardisation that would allow for the development of robust APIs to securely exchange this data.
The maritime sector has embraced this and has progressed beyond narrow data silo building and now look beyond the “shipping-based ecosystem”. They are increasingly placing themselves within a “Smart Port and City ecosystem”. There has also been a shift from identifying a need to share data, not just with other ports, but with shore-based operations. The emergence of Ports as multi-dimensional hubs is a positive development, but still falls short of the increasingly important incorporation of last and first mile delivery considerations brought about by the burgeoning e-commerce trade.
Unfortunately, under the emerging “west open system” scenario, the detail and policy debate are relatively narrowly defined. The debate has been limited to narrow, often phrased in politically driven outcomes. There does not appear to be a comprehensive look at the full scope of the digitally integrated trade and supply ecosystem. For example, the EU has narrowed its digital focus in the maritime sector to the use of technology to reduce shipping and transport carbon footprints i.e., an environmental “green view”. With this narrow focus comes dangers, as it does not consider how big data that is shared, can be aggregated such that it disrupts supply chains.
The whole purpose of the EU digital framework is to give maximum transparency with regards shipping i.e., location etc, in real time. The intent is that this information would be used to facilitate efficient decision making with regards planned connections between intermodal transport suppliers. More efficient equipment allocation and utilisation reduces the occurrence of bottlenecks, goods time in transit and congestion. The net result is a reduction of Co2 emissions across the whole supply chain network.
The EU and others have encouraged and supported several initiatives with regards network structures to enable support for the “greening” of these transportation systems. Initiatives include: The International Port Community Systems Association (IPCSA), The International PortCDM Council and the DCSA Just in Time Port Call to name but a few. The focus has been on the standardisation of data enabling data sharing to empower the use of real time information to improve transportation efficiency. This noble
cause, albeit very narrow in scope as it restricts software development to EU members, has created the distraction that has made it easier for EU Ports such as Rotterdam, to “dock” with the Logink platform.
When speaking to contacts within the EU Port eco-systems, the nature of the debate changes substantially when you change the focus of the question from what data is being shared to what is that data being used for. For example, Rotterdam is a leader in developing an open global port ecosystem and are rightly proud of the level of information and data that they share with the likes of China Merchants Ports or Hutchinson Ports. Their focus is on “live” data interchange that facilitates efficient docking, offloading, inter-modal connections and so on.
However, when taking the discussion one level down, the nature of the conversation changes. When asking what they understand about Logink and China closed digital platform that is not readily transparent or where all this data and information lands, they concede that they do not fully understand what Logink does or where it fits. They concede that they cannot say what China does with this data. Going up a level, speaking to several trade missions within the EU, none seem to be aware of Logink or how it is already in use by EU Ports.
The Technology and Digital Trade Approach taken by China
China has taken a broader view of the benefits of the emerging digitalisation of global trade. Even before the advent of the Belt Road and Digital Silk Roads, China operationalised their 1995 notion of Information warfare in 2010 with Maj. General Wang Pufeng introducing the Logink platform. This was at a time when China recognised that world trade had started its transition to a connected and digital economy.
Under the “Open China” policy framework and its concomitant trade benefits, the world’s first real logistics and supply chain data information sharing warehouse network was developed and introduced. Logink was initially developed as a platform to build up data and information so that China could understand their competitors whilst creating their own digital systems.
As China’s digital ambitions grew, Logink was systematically subsumed under layers of bureaucratic shields within the DSR. The aim was not simply to aggregate data but to develop potential to disrupt supply chains and logistics systems.
Unfortunately, many using Logink have not done the necessary due diligence but have relied on the narrative of the CCP PR departments and the soft diplomacy message of all being tied to a common human destiny. It is no surprise, therefore that many in shipping, logistics and supply chain management have not heard of Logink. It may well be that this feeling of kumbaya because of the “open” China under Deng Xiaoping, with a clear separation of the State and the Economy, did not raise suspicions around intent.
There is also a laser focus on aligning research and new technology standards with its national interest. The planned China Standard 2035 will be a roadmap for global leadership across global IT / ICT standards rather than within a specific area or functionality. The head of the China National
Standardization Management Committee, Dai Hong, summed it up in 2018 when identifying that global technical standard were still to be formed, giving China an opportunity to surpass the world. This has given China the opportunity to define standards, export the technology system and ultimately mine the data from those systems to create an advantage for China.
The BRI has facilitated this under the BRI banner, particularly with the likes of Myanmar by offering and incorporating cheap ICT infrastructure into the Kyauk Phyu and Yangon Smart city projects. Essentially it is locking Myanmar into a single and closed digital network and would be extremely costly if Myanmar wanted to switch to other digital trade platforms using international standards.
The banning of Huawei and Beidou infrastructure in the West further highlights a key difference in approach. China has better understood that it is the interface software that gives the IT infrastructure and operating software, the real power. The network is only as powerful as the interface platform allows it to be. By not having this level of discussion, the likes of the Logink platform have been creeping into the very fabric of the global trade network design.
Going Forward
Smart port, city and supply chain network design and configuration is where the discussion needs to be located. This is becoming urgent, particularly as the Logink platform has been integrated into Alibaba’s Cainiao’s global logistics network. The Cainiao e-commerce platform is docked into Logink, making this interface software a key player in connecting Europe and China digital trading systems. The ultimate mission of the Cainiao network configuration is the full integration of the global e-commerce platform. Logink has spread its influence through Cainiao that has already gained acceptance through 200 Cainiao integrated logistics and service providers operating through 220 countries and regions.
Strategically, the Cainiao logistics hub is conveniently based in Belgium city of Liege and integrates the six e-hubs of: Hangzhou, Hong Kong, Kuala Lumpur, Dubai, and Moscow.
What are the geo-political and strategic ramifications of Logink?
Firstly, one needs to know the location of Logink within China. It is known as the National Transport and Logistics Public Information Platform and is a platform that allows data aggregation and sharing within China as well as its trade partners. It is increasingly used as the underlying software platform being used by BRI participants via China’s DSR strategy. It is administered under the Ministry of Transport but operationally falls under the direction of the China Transport Telecommunications and Information Center (CTTIC). In turn CTTIC is guided by the CCP and Xi Jinping’s DSR strategy.
CITTIC is a central bureau where all Chinese information technologies intersect. It is responsible for bringing the BRI’s strategy of seamless intermodal transport and trade across the global sea, air, and land into one system and forum. It provides users the data that facilitates supply chain coordination, customs reporting, transportation monitoring and smart logistics. This centralised bureau for data integration of ALL IT and logistics within China was the first step in bringing together the BRI and DSR. In
essence the DSR brings a co-ordinated approach to the BRI through an integration of software platforms (LOGINK) with ICT infrastructure (Huawei 5G Network base stations and subsea optic fibre cables).
This level of data integration allows multiple organisations to communicate and interact under the one platform. This includes retailers, bankers, shippers, and end use customers. Essentially Logink is portrayed as a one stop enquiry service for public logistics information and data resources. Seen as a benign software application, it has been welcomed into several international authorities, not least of which is the International Port Community Systems Association. Dr Sun, Director General of Logink, played to the benign nature of Logink when saying that their work with the IPSCA was to simplify the logistics visibility in a standardised way that offers the international community the following benefits: standard setting, information interchangeability and data services.
It is sold as an “open system” that allows both private and state entities to seamlessly share data and information, creating greater trade transparency. This deflected attention away from China inserting itself into the setting of international data standards. A simple example would be setting the data standard for measuring when a vessel had arrived at its port of destination. This soft approach morphed into the National Transport and Logistics Information Platform (NTLI), a platform that facilitates information aggregation and sharing. It also allows China access authority in several key international ports through its participation in setting international data standards.
Secondly, Logink has been built into and subsumed into the three Pillars on which the BRI is building China as a regional hegemon. These three pillars are: COSCO becoming a global integrator of container logistics that will use the Logink platform; Cainiao as a system to build and control global logistics; and Chinese Technology use across key logistics sectors.
Further to the Cainiao pillar discussed earlier, COSCO as a global integrator of container logistics, covers 200 ports through direct investment. It also has ownership in 51 container ports worldwide. Furthermore, it has expanded its first / last mile pickup network through partnerships like Pearl Logistics in Greece, to 33 countries.
What are the potential ramifications for Global Trade and Supply Chain?
As global trade and connectivity becomes increasingly digitised and technology driven, Beijing has realised that advances in this new paradigm will bring about a new global order. Control of these new networks, standards and platforms has shaped China’s vision of comprehensive power. It is no coincidence that Wang Xiangsu, a retired PLA general, claims that whoever controls the flow of resources, markets, and money, controls the global order.
This level of control, while not yet achievable in the here and now, is certainly within reach of the Logink platform.
In the case of Myanmar, it needs to be aware that the Port of Kyauk Phyu could be susceptible to data manipulation such that Logink shapes information that is in China’s national interest. For example, the Logink search facility algorithm for support services at the port could be set to give Chinese vendors preference at the expense of local community organisations.
The system could be used in a vindictive manner should Myanmar change its attitude towards China. For example, it can re-route vessels, giving docking priority to “favoured” shipping lines and reduce supplies / constrains supplies into and out of Myanmar. The integrated platform can be used to send incorrect or false data to stall availability of wharf space and or loading equipment.
Concluding remarks
In the increasingly connected global markets, software enables multiple organisations within and outside logistics and trade to communicate and interact under one platform. However, there is real concern that China is moving the world to a SINGLE platform that is under the direct control of the Party – the Chinese Communist Party.
Myanmar needs to pursue a port community platform that is independent and controlled by the participants rather than through a state instrument – in this case the state being China. There should be robust security and API protocols that protects the integrity of the data that is shared in an open platform.
