Since the article published on this website in 2021, on China’s drive towards creating a global smart supply chain integration system by way of its LOGINK platform, global trade has seen an escalation in not only the smart supply chains of ports and global logistics, but there has also been a notable increase in the expanse and use of the China LOGINK platform. Driving this has been the nine-point plan introduced by the CPC in 2019 to make China a transportation superpower by 2050 – just after the 100-year anniversary of the Party.
Being a transport superpower will give China considerable influence and control over global trade. It creates the gateway to establishing itself as an economic hegemon that has the tools to coerce and manipulate supply chains and trade for the benefit of Chinese Companies.
The historical evolution of LOGINK also points to how Xi Jinping’s China has now weaponized the data platform that was initially developed in 2007 as a regional / domestic tool to facilitates truck / road transport in the Zhejiang Province. In 2010, it morphed into a national data tracking system but extended its remit to include shipping.
However, the biggest philosophical inflection took place in 2014, shortly after Xi Jinping’s Belt Road Initiative formulation. Notably, the focus changed to where global trade data interfaces with China and the Belt Road Initiative (BRI) participants.
Under the banner of the BRI and DSR (Digital Silk Road), it is apparent that China has taken a significant leadership role with regards integrated smart port and logistics. Their level of seamless data integration within their data sharing and exchange platforms have gained traction within global supply chains and logistics. Cyber integration is greater than what most global organizations and Governments understand.
Other trends that point to China’s intent to have LOGINK as an economic weapon include the 2020 policy mandating that data is to be included in factors of production. Data was elevated to having the same value as capital, land and labor. It was argued that data has a multiplier effect on efficiency but needed a framework of management and protection through unified data standards and data sharing for its real power to be realized. Mosaic theory gives context to this direction as it formulates that disparate item of information and data that individually has limited value, takes on significant value when combined with other information.
Essentially when digital platforms combine different sets of data from various sources, the power of user data integration grows exponentially. LOGINK facilitates this exponential growth in economic and commercial strength. From a trade and commerce perspective, the platform has morphed way beyond the initial single window platform. As the platform moves to a cloud-based IOT enabled system, the system gives China increasing economic power.
Does this deeply embedded data sharing network point to the emergence of a singular, closed digital trade system that elevates China to hegemon status? Does the lack of knowledge and understanding of China’s DSR ambition provide a digital back door for China’s closed digital network to replace Western open data exchange platforms?
LOGINK: driving the shift to a single, closed digital trade platform?
Over the last few years, we have seen the scope of data exchange widen. This data exchange now covers Government-to-Business flows (vessel and cargo status, transit conditions etc.), Business-to-Government flows (electronic bills of lading, geolocation data etc.) and Business-to-Business flows (billing and payment, electronic booking etc.). What we are seeing are the early-stage deliverables of the 2015 plan by China’s Ministry of Transport vision to create LOGINK as a cloud-based Business Process as a Service (BPaaS).
Although the West typically talks of data silos within an open system that gravitate towards data exchange across these silos, it is becoming increasingly apparent that there has been a drift to a closed system that will be under the control of a central power. As there has been difficulty in getting to a level of data standardization that would allow for the development of robust APIs to securely exchange this data, the International Port Community Systems Association (IPCSA) has joined with LOGINK in April 2022 to launch the Network of Trusted Networks (NTN) that would give China access to data and information across 70 Ports and 10 airports as well as setting data standards for the ASEAN region.
Unfortunately, under the “Western open system” underpinning the IPCSA, there is the failure to recognize that LOGINK is subject to China’s 2017 Intelligence Law and thus effectively transfers data ownership and control to the CPC. Whilst it is claimed that the system would have permissioned access, this is not possible under China’s cybersecurity laws.
What needs to be known about China’s approach to technology and digital trade
China takes a broader view of the benefits of the emerging digitalization of global trade. Even before the advent of the BRI and DSR, China operationalized their 1995 notion of information warfare in 2010, at a time when China recognized that world trade had started its transition to a connected and digital economy.
Fortunately, those using LOGINK are beginning to re-evaluate these significant changes in direction brought about by Xi Jinping’s new China and Party centrality policy framework.
A newly weaponized LOGINK has given China greater leverage in defining technology standards, exporting the technology system and mine the data from those systems to create an advantage for China. With China now investing heavily in data warehousing and associated data interrogation, it is inevitable that LOGINK will increasingly creep into the very fabric of the global trade network design.
What are the geo-economic risks and strategic ramifications of LOGINK?
Within China, LOGINK is known as the National Transport and Logistics Public Information Platform. It is a platform that allows data aggregation and sharing within China as well as its global trade partners. It is increasingly used as the underlying software platform 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 CPC and Xi Jinping’s DSR strategy.
CTTIC 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 centralized bureau for data integration of all planning within China was the first step in bringing together the BRI and DSR. The DSR brings a coordinated approach to the BRI through an integration of software platforms (LOGINK) with ICT infrastructure (Huawei 5G Network base stations and subsea optic fiber cables).
This level of data integration allows multiple organizations to communicate and interact under the one platform, with LOGINK seen as a one stop enquiry service for public logistics information and data resources. This includes retailers, bankers, shippers, and end use customers. Believing it to be a politically benign software application, it has been welcomed into several international authorities, not least of which is the International Port Community Systems Association.
Sold as an “open system” that allows both private and state entities to seamlessly share data and information, it 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 is deemed to have arrived at its port of destination. This soft approach morphed into the National Transport and Logistics Information (NTLI) platform that facilitates information aggregation and sharing. However, it also allows China access authority into several key international ports.
Under the BRI / DSR strategic framework, LOGINK has been subsumed into the three pillars on which the BRI is building China as a regional hegemon. These three pillars are: 1) COSCO becoming a global integrator of container logistics that will use the LOGINK platform; 2) Cainiao Smart Logistics Network as a system to build and control global logistics; 3) Chinese technology use across key logistics sectors.
With the bifurcation of global trade, LOGINK has given China a substantial advantage in that it has access to data and information that it is capable of manipulation. This does not bode well for sustainable supply chains. Of concern is China’s use of economic coercion to enforce its of view on a matter, which will escalate around the question of Taiwan.
Whilst many focus on the increasing potential for some form of militarized activity around the Taiwan Strait, it is more likely that China will use gray warfare or an asymmetrical approach. With China’s growing international isolation and growing physical battlefront, it would be more effective to use its technological capability to inflict damage on other nations by hurting their economies and trade networks.
When talking of economic coercion, LOGINK is capable of disrupting trade in favor of Chinese suppliers. China could use the market data to target a countries partner. Having access to price, quantities and transport it could use this data to undercut prices and replace current suppliers with a Chinese supplier.
It would also have the capability to disrupt supply lines. For example, it can re-route vessels, giving docking priority to “favored” shipping lines and reduce supplies / constrains supplies into and out of a country. In the extreme, data manipulation could be used to cut off a country’s strategic supplies or disrupt the transport of sensitive and listed products across international borders.
In the most extreme cases, it can make a company or nations’ entire supply chains go “dark.” With no visibility or transparency, supply chains will come to a complete halt. One has only to look at China’s zero-Covid lockdown policy to see the impact on supply chains: LOGINK sustains this ability to simply shut down international transport systems that would do economic harm.
As global trade becomes increasingly digitally integrated, there needs to be a greater awareness of the power of that data and how it can be used. Companies need to be aware of these developments such that they have robust API software in place that will enable effective data exchange without compromising the security of their supply chains. The horse may well have bolted in terms of a weaponized LOGINK, but it is never too late to put systems in place that make you less vulnerable to economic coercion and / or trade manipulation.
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