Cooptation, Coexistence, or Confrontation? China’s Future Strategies for Transforming Telecommunication Orders

Western-led transnational telecommunication orders, e.g. for inter-bank communication and internet standards, are challenged by a dual transformation: On the one hand, rapid technological change is enabling more efficient and interconnected systems. On the other hand, transnational telecommunication orders, so far dominated by US and European actors, have become key areas of geoeconomic competition between Western “established” and non-Western “rising” powers, first of all China. Against this backdrop, Chinese authorities and state-controlled companies seek to enhance their technological and institutional autonomy within and beyond Western-led transnational telecommunication orders. This paper examines how China’s quest for autonomy in reshaping transnational telecommunication orders may evolve amid technological innovation and geoeconomic competition. It also explores the implications of possible future strategies of China for global telecommunication governance. Drawing on theories of network effects and their impact on institutional change, we argue that China’s dynamic exposure to network effects will shape its strategies for gaining autonomy and transforming telecommunication orders. Depending on the malleability of networks and the ensuing degree to which China continues to be constrained by network effects that favor incumbents, different strategies become more feasible. These strategies range from cooptation into the incumbent order (leading to a reshuffled oligopoly of telecommunication governance), pursuing coexistence of largely decoupled orders (leading to order fragmentation) to confrontation through the establishment of a rival telecommunication order (leading to a struggle over quasi-monopolistic domination). We develop process-centered, forward-looking “path projections” for two key orders: international banking telecommunications, currently dominated by the Society for Worldwide Interbank Financial Telecommunication (SWIFT), and internet governance standards, for which the Internet Corporation for Assigned Names and Numbers (ICANN) is the focal institution. Our “path projections” identify key features of alternative Chinese strategies, set out indicators, and assess the likelihood of different strategies and outcomes based on trend data. We find that China’s strategies will evolve differently across international banking and internet standardization, setting the course for diverging futures of the two telecommunications orders. Cooptation is China’s probable near-term strategy in the international banking telecommunication order, leading to the growing centrality of Chinese institutions and proxies within the existing Western-led order. By contrast, we expect China to pursue a strategy of coexistence in internet governance, where the internet’s decentralized architecture and China’s low exposure to network effects lead China to gain autonomy outside the existing order. Outright confrontation remains a distant possibility in both areas. In navigating diverging transnational telecommunications futures, we expect incumbent powers in the US and the EU to play a decisive role. Our paths projections therefore suggest key actions incumbent powers may take to address the dual geopolitical and technological pressures, which will shape the success of Chinese strategies and, in turn, steer interbank telecommunications and internet standardization toward alternative governance futures with varying political and economic implications. Thus, the paper provides a forward-looking, theoretically grounded, and policy-relevant contribution to International Relations scholarship on power rivalries and institutional change, as well as to International Political Economy research on geoeconomic competition in the transnational ordering of telecommunication.