Data Flows Surge in Asia’s New Great Game

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The vessel Kizuna, weighing 8,600 tonnes and moored in Nagasaki Bay, Japan, lives up to its name, meaning “bonds” in Japanese. Functioning as a cable-laying ship, it deploys robots capable of descending 3,000 meters underwater to install and repair subsea cables. These crucial conduits facilitate communication, online shopping, stock trading, and access to various digital services for millions of Asians. Over the past 23 years, since Captain Sakurai Atsushi first laid a cable connecting Japan’s Honshu with Okinawa, the demand for data in the region has surged, strengthening the digital connections that unite Asia.

According to TeleGeography, a research firm, Asia’s international bandwidth usage expanded by 39% in 2022, surpassing the global average of 36%. The region’s growing user base and flourishing economies have propelled it to become a highly desirable market for new Internet infrastructure. However, increasing geopolitical tensions, protectionist measures, and differing data regulations present challenges to the smooth flow of information.

Previously, the construction of Internet infrastructure was a collaborative endeavor between countries and companies. However, in recent years, this cooperative environment has soured due to escalating tensions between China and the United States. Both nations are in a race to build and control digital infrastructure inaccessible to the other. Natural disasters and the proliferation of fishing trawlers also pose threats to subsea cables.

Security concerns regarding communication infrastructure are not new, tracing back to the era of submarine cables. Nonetheless, recent incidents have intensified worries about cyber threats, espionage, and potential disruptions due to geopolitical conflicts, especially around the South China Sea.

As content providers distribute data centers and bring content closer to consumers, intra-Asia data flows have surged, reducing reliance on routes to America and Canada. Geopolitical dynamics are reshaping the location and construction of digital infrastructure in Asia. The emergence of alternative hubs, such as the Philippines and Guam, underscores a shift in the infrastructure landscape.

Yet, the absence of standardized rules governing digital trade presents a significant challenge. Different regions advocate diverse approaches, with China emphasizing sovereignty and security, the EU prioritizing privacy, and the United States primarily focusing on commerce. Singapore’s proactive stance on digital trade agreements has attracted attention, while Japan has put forward the concept of Data Free Flow with Trust to counter digital protectionism.

Despite these efforts, conflicting rules and regulations create a complex array of challenges for digital governance. Localization measures and barriers to data flow could increase costs and hinder small and medium-sized businesses. Without coordinated regional efforts, digital protectionism may impede the potential of data to foster economic growth and innovation.