Countering the Digital Silk Road

With this in mind, the report suggests six priority technology domains: subsea cables, next-generation telecommunications, low Earth orbit (LEO) satellites, data centers and cloud services, artificial intelligence (AI), and smart cities. Together, these domains form the foundation of the digital infrastructure and services that will power the economies and governments of the modern world. The United States and its allies must not allow China to dominate these domains in key emerging market security partners, such as the Philippines, Indonesia, Kenya, and Egypt, recognizing that any strategy that seeks to stop Chinese technology everywhere—even in these countries—is doomed to fail.

The case for countering the DSR is as much about seizing opportunity as mitigating risks. Unlike the global transition to 4G and 5G networks, when the West lacked competitors that could match Huawei and ZTE’s state-subsidized offerings, the United States and its allies have a formidable hand to play in several vital technology transitions now unfolding across the globe. U.S. firms dominate the AI frontier, dwarfing competitors in capital investments and model capabilities. U.S. firms command 70 percent of the global cloud market. Over 90 percent of the global subsea cable infrastructure was built by U.S. or allied companies. Since 2020, Starlink has launched more LEO satellites than all its competitors combined. Washington and its allies now have a generational opportunity to wield these strengths to positively shape digital ecosystems around the world, secure first-mover advantages, and box out Chinese companies’ ability to reinvest overseas revenue to close gaps in strategic technologies.

But doing so will require a bold new approach. Over the past decade, the United States and its allies have haltingly rolled out new offices, initiatives, and funding mechanisms to match the DSR. The G7 touts a new Partnership for Global Infrastructure and Investment (PGI) to deploy $600 billion; the United States has mobilized just one-tenth of that amount to date. The Quad’s ambition to support subsea cables, cybersecurity, and other digital infrastructure across the Indo-Pacific is well directed but similarly under-resourced. The European Union’s Global Gateway committed $350 billion for global infrastructure, but meaningful coordination with U.S. investments and the PGI remains sparse.

The U.S. government has mounted several reforms to level up America’s technology statecraft. The State Department established the new Bureau of Cyberspace and Digital Policy. Congress created new investment tools through the International Development Finance Corporation, International Technology Security and Innovation Fund, and Countering PRC Influence Fund. Administrations of both parties have pursued efforts to promote a standards-based model for secure and trusted technology promotion abroad, such as the Clean Network initiative from President Donald Trump’s first administration and the now-rescinded Framework for AI Diffusion from President Joe Biden’s administration. At the same time, U.S. allies like the EU, Japan, and Australia have embraced a more security-minded approach to foreign assistance and strengthened coordination. These efforts are welcome, overdue, and wholly insufficient.

In the short term, as the Trump administration considers a new iteration of the AI Diffusion Rule, it should raise its sights and offer the world not only a framework for accessing cutting-edge AI chips, but advanced technologies more broadly to draw them into the U.S. technology ecosystem. The administration should also recognize that it cannot ask emerging markets to limit Beijing’s leverage through the DSR as the United States exploits its own economic leverage through rapidly shifting tariff and export control policies. Long-term technology partnerships require a foundation of trust that recent policies risk undermining.

In the longer term, the United States must recognize that the lesson of the 5G race is that market forces alone cannot guarantee U.S. and allied tech adoption—especially as China doubles down on support for strategic technologies. The answer, however, is not to mirror Beijing’s government-driven approach, but to pursue more ambitious statecraft fit for an era of global technology competition.

To that end, the report offers the following recommendations:

Strategy and Coordination

Craft a Global Technology Competition Strategy. The White House should direct the State Department, led by the undersecretary for economic growth, energy, and the environment and the Bureau of Cyberspace and Digital Policy, to develop a detailed strategy that (1) prioritizes countries for U.S. engagement, (2) identifies the most strategically vital technology domains, and (3) aligns U.S. investments and other tools accordingly.

Establish a Strategic Competition Council. The White House should create an interagency Strategic Competition Council to elevate and better coordinate U.S. efforts to counter Chinese influence in strategic markets and sectors abroad, including digital infrastructure and emerging technologies.

Strategic Investment

Establish a new U.S. Partnership Agency by consolidating the U.S. International Development Finance Corporation (DFC), Export-Import Bank of the United States (EXIM), U.S. Trade and Development Agency (USTDA), PGI, and the International Trade Administration’s Global Markets and Industry & Analysis functions. At the same time, consolidation must not be a pretext for cutting the overall resources that these agencies receive, beyond any efficiencies from streamlining. This moment demands more investment in proactive commercial engagement, not less.

Alternatively, the White House and Congress should reform the DFC and EXIM for the global technology competition.

DFC—Congress should quadruple its total lending authority to $240 billion and designate emerging technologies and digital infrastructure as a priority area. Congress should also loosen restrictions that often block the DFC from supporting digital infrastructure projects that may incidentally benefit high-income countries and modernize how the DFC accounts for equity investments, consistent with the Enhancing American Competitiveness Act.

EXIM—Policymakers should require the EXIM to allocate at least half its lending support to projects that counter China and promote advanced technologies, relax U.S. shipping and content requirements for China and Transformational Exports Program investments, and at least double the EXIM’s default cap to 4 percent.

Review and potentially expand the International Technology Security and Innovation Fund (ITSI), administered by the State Department, which promotes secure telecommunications networks and resilient information and communications technology (ICT) and semiconductor supply chains abroad. ITSI currently has $500 million in funding over five years.

Expand and reform the Countering PRC Influence Fund (CPIF). Congress should revise the CPIF’s authorizing language to make countering the DSR an explicit priority and scale it to at least $1 billion, increasing it further based on performance.

Expand the USTDA’s Global Procurement Initiative. The Global Procurement Initiative improves the capacity of foreign public officials to account for the full life cycle of costs, such as security, reliability, and maintenance, when making significant procurement decisions.

Leverage U.S. influence over multilateral development banks to raise standards for all ICT projects. Washington and its allies should leverage their financial contributions to multilateral development banks, such as the World Bank and Inter-American Development Bank, to raise procurement standards to further emphasize quality, trust, and security, drawing on insights from the USTDA’s Global Procurement Initiative.

Identify and prepare for critical procurement decisions for digital infrastructure and services in priority emerging markets. The State Department should direct embassies to identify the life cycle of digital infrastructure, determine future procurement junctures when such infrastructure will require modernization or replacement, and work now to prepare U.S. and allied alternatives.

Technology Diplomacy

Pilot a cohort of Foreign Technology Officers. A pilot class of Foreign Technology Officers would receive extensive training in critical and emerging technology policy and deploy to priority posts abroad.

Expand training for Cyberspace and Digital Policy Statecraft at the Foreign Service Institute. Established in 2024, the class is routinely oversubscribed. The State Department should increase offerings and require this training for Regional China Officers.

Appoint more ambassadors with leadership experience in the technology sector. Few U.S. diplomats, and especially ambassadors and senior Foreign Service Officers, have a deep background in technology, limiting their ability to elevate and shape technology policy on the ground.

Expand the number of U.S. Commercial Service Officers and DFC employees deployed abroad to increase support for U.S. technology companies to identify and secure strategic opportunities in emerging markets.

Focus the U.S. Department of Defense’s Office of Strategic Capital. The White House should ensure that the office focuses on providing analysis about which emerging markets deserve prioritization from the Defense Department’s perspective; otherwise, it should focus investments on U.S. and allied defense-relevant technologies overlooked by current market incentives.

Leverage NATO member-state investment funds. NATO should convene a summit to explore opportunities for member-state sovereign wealth funds and other investment funds to support digital ecosystems in priority emerging markets. Canada, Denmark, Italy, Norway, and Türkiye—and perhaps, soon, the United States—have sovereign wealth funds. Norway’s fund is the largest in the world, with $1.8 trillion in assets.

Technology Partnerships

Create a mechanism for countries to request strategic technology partnerships with the United States. Washington should create a framework for foreign governments to request strategic technology partnerships with the United States. Washington could lay out clear, broadly consistent criteria—as it did with the now-rescinded Framework for AI Diffusion—as a condition for these partnerships, such as robust intellectual property and cybersecurity protections and divestment from China-linked digital infrastructure. In exchange, Washington would fast-track approvals and support from bodies like the new U.S. Partnership Agency and expand technology trade missions, research collaboration, and talent exchanges.

Strengthen and focus the American AI Exports Program on key emerging markets. The July 2025 executive order on Promoting the Export of the American AI Technology Stack requires industry proposals for a full-stack AI technology export package. Given limited capacity and resources, the administration should focus the newly created program on priority emerging markets. The Economic Diplomacy Action Group empowered under the July 2025 executive order should undertake a comprehensive review of all relevant federal tools and resources to identify opportunities to streamline application procedures, requirements, and review timelines.

Elevate smart cities in the AI Exports Program. In developing the new AI Exports Program, the Trump administration should clarify that it will prioritize AI-enabled smart city applications that respect democratic values to jump-start the development of integrated rights-respecting U.S. offerings able to compete with China’s techno-authoritarian alternatives.

Focus coordination with allies and partners in strategic regions to maximize impact. The United States should work more closely with technology-leading allies and partners to identify select “swing states” and strategic technology areas and align investments and engagement to the maximum extent possible—for instance, by leveraging the EU’s Global Gateway and the Trilateral Infrastructure Partnership between Australia, Japan, and the United States.

Create a U.S. Partnership Portal for both U.S. and foreign companies, universities, and research institutions to harness existing U.S. government tools and resources. The White House should create a single point of entry where U.S. companies and foreign counterparts can access all the relevant resources and personnel.

Revive Digital Ecosystem Country Assessments. Before its closure, the U.S. Agency for International Development conducted in-depth assessments of emerging market digital ecosystems. These assessments are vital for effectively targeting U.S. public and private sector engagement.