By Zhai Kun, Liu Song
Digital governance and transformation has become a hot topic worldwide. In recent years, ASEAN has created another economic miracle on the back of the 20-year global digital economy development miracle. In 2021, the digital economy in Southeast Asia reached US$174 billion in gross merchandise value, which is expected to rise to a staggering US$1 trillion by 2030.
Four drivers support the continuous and rapid development of the China-ASEAN cooperation on the digital economy.
The huge digital economic market of Southeast Asia provides a strong driving force for the development of the China-ASEAN digital economy partnership. Currently, more than 440 million people use the internet in the six major Southeast Asian markets of the digital economy— Singapore, Thailand, Malaysia, Indonesia, Vietnam, and the Philippines. In the past three years alone since 2020, these countries have added some 60 million internet users, 80 percent of whom are online shoppers. As netizens harnessed the internet more comprehensively and intensively, the digital economy in ASEAN realized trend-bucking growth of 49 percent in 2021 despite the negative effect of the COVID-19 pandemic.
The huge market has attracted many Chinese giants specializing in digital technologies to invest in ASEAN. Tencent, a Chinese technology and entertainment conglomerate, has been investing in Sea Limited, a tech company headquartered in Singapore, since 2010. Sea Ltd. is the most developed digital economy company in Southeast Asia, and its products and services, including online games, e-commerce platforms, and digital financial services, have amassed a wide range of loyal users.
In 2016, Chinese digital giant Alibaba bought Lazada, a Southeast Asian e-commerce platform, and made two additional investments totaling US$1.3 billion in 2022. Lazada has since grown into one of the most popular e-commerce platforms in Indonesia, Malaysia, Thailand, and the Philippines, with registered users of over 100 million.
Despite the resounding success of Chinese digital giants investing in Southeast Asia, ASEAN countries are still facing numerous problems such as unbalanced regional development and a limited market. Therefore, Chinese business models need to make continuous adjustments to take root and grow in the region.
Southeast Asian countries have the demand for digital economic development, which is another factor driving China-ASEAN cooperation on the digital economy. China has assumed a leading role in developing digital technologies and accumulated abundant experience in capital investment and operation management. ASEAN has highly complementary interests with China in trade and the supply chain, and both sides share a natural bond in geography and culture, which makes China an ideal partner for ASEAN to cooperate on digital economic growth.
Fully understanding and respecting the actual situation of the digital economy of ASEAN, Chinese digital companies not only focus on facilitating and improving local infrastructure in accordance with local conditions, but highlight the capabilities of their development models to boost the growth of the local digital economy.
Significant improvements in infrastructure and suitable business models injected great impetus into digital economic growth in Southeast Asia. Tencent built international data centers in Thailand and Indonesia to provide local customers cloud computing services and solutions for industrial digitalization across multiple service fields including government administration, online gaming, livestreaming, and finance. Huawei, a leading Chinese telecommunications company, has proactively participated in building infrastructure in Indonesia including several base stations in remote forests to help residents in Papua access a 4G network.
Although Southeast Asia has realized great progress in connectivity through mobile networking, the region still needs to cooperate with China to tackle many outstanding problems including weak development foundations, cultural differences, and insufficient application of basic digital technologies.
The governments of China and ASEAN countries have rolled out multiple preferential policies on the digital economy, which became the third driving force for China- ASEAN cooperation in the field. ASEAN-China Strategic Partnership Vision 2030, adopted by the Chinese government in 2018, highlighted both sides’ commitment to cooperation on the digital economy, and designated 2020 as the ASEANChina Year of Digital Economy Cooperation. At the end of 2020, China proposed an Initiative on Building ASEAN-China Partnership on Digital Economy. At the 25th China-ASEAN Summit in November 2022, both sides adopted the ASEANChina Joint Statement on Strengthening Common and Sustainable Development to promote cooperation on digital transformation.
The governments of ASEAN countries have also played a proactive role in promoting the development of the digital economy and relevant industries. In June 2020, the government of Singapore signed the first Digital Economy Partnership Agreement (DEPA). In 2021, the government of Malaysia rolled out the Malaysia Digital Economy Blueprint (2021-2030). The preferential policies significantly improved coordination of the digital economy markets of China and ASEAN, removed trade barriers and the restrictions of different rules, and facilitated bilateral cooperation. However, the digital economy is still in the nascent stage in Southeast Asia, which means that the current policies and supervision regulations must evolve accordingly in the near future.
Another trend driving China- ASEAN cooperation on the digital economy is efforts to jointly establish a new order of regional and global digital governance. A latecomer to the digital economy, ASEAN respects local markets, avoids “taking sides” on ideology, and is active in signing digital cooperation agreements with multiple countries to use its resources to the full.
Southeast Asia is a massive market with high potential profits, so both China and the US are grappling with working together to foster inclusive digital growth in the region. At the 76th Session of the United Nations General Assembly held in 2021, Chinese President Xi Jinping proposed the Global Development Initiative (GDI). At the 17th summit of the Group of 20 (G20) held in 2022, President Xi called on all countries to “promote connectivity in the digital age, and take effective measures to promote digital literacy and skills for all.”
By combining American technologies with the Chinese business model, ASEAN not only fosters a more inclusive regional digital order that is compatible with both China and the US, but also creates space for development and innovation in global digital governance, which will guarantee the continuous yet rapid development of China-ASEAN cooperation on the digital economy.
These four trends are supporting and boosting the development of China-ASEAN digital cooperation. Coordinating their relationship and ensuring they form a systemic synergy promoting China-ASEAN digital economy cooperation are essential and will help to foster a global digital governance model bent towards the positive effects of technologies on people’s daily lives.
(The article was originally published in Chinese on Lianhe Zaobao. China Report ASEAN has reprinted it with the authors’ permission.)
About the authors| Zhai Kun is a professor at the School of International Studies and deputy dean of Academy of International and Regional Studies, Peking University. Liu Song is a researcher at the Center for ASEAN Studies, Peking University.
China Report ASEAN 