SINGAPORE, April 6 (Reuters) – China’s state-owned telecommunications companies are developing a $500 million undersea fiber-optic Internet cable network that would connect Asia, the Middle East and Europe to rival a similarly claimed project from the United States, four people involved in the deal told Reuters. The plan is a sign that the intensifying tech war between Beijing and Washington threatens to tear apart the fabric of the internet.
China’s top three carriers China Telecommunications Corporation (China Telecom), China Mobile Limited and China United Network Communications Group Co Ltd (China Unicom) are mapping one of the world’s most advanced and far-reaching submarine cable networks, according to the four people, who have direct knowledge of the plan.
Known as EMA (Europe-Middle East-Asia), the proposed cable would link Hong Kong to China’s island province of Hainan, before reaching Singapore, Pakistan, Saudi Arabia, Egypt and France, the four people said. They asked not to be named because they weren’t authorized to discuss potential trade secrets.
The cable, which would cost around $500 million to complete, was reportedly manufactured and laid by China’s HMN Technologies Co Ltd, a fast-growing cable company whose predecessor company was majority-owned by Chinese telecommunications giant Huawei Technologies Co Ltd, the people said.
They said HMN Tech, which is majority-owned by Shanghai-listed Hengtong Optic-Electric Co Ltd, will receive subsidies from the Chinese state to build the cable.
China Mobile, China Telecom, China Unicom, HMN Tech and Hengtong did not respond to requests for comment.
China’s foreign ministry said in a statement to Reuters that it “has always encouraged Chinese enterprises to carry out foreign investment and cooperation” without directly commenting on the EMA cable project.
The news of the planned cable comes on the heels of a Reuters report last month that revealed how the US government, concerned about Beijing’s internet data interceptions, has successfully thwarted a series of Chinese submarine cable projects at abroad in the past four years. Washington also blocked licenses for planned private submarine cables that would connect the United States with China’s Hong Kong territory, including projects spearheaded by Google LLC, Meta Platforms, Inc, and Amazon.com Inc.
Undersea cables carry over 95% of all international internet traffic. These high-speed pipelines have for decades been owned by groups of telecommunications and technology companies who pool their resources to build these vast networks so that data can move seamlessly around the world.
But these cables, which are vulnerable to espionage and sabotage, have become weapons of influence in a growing competition between the United States and China. Superpowers are striving to master the advanced technologies that could determine economic and military supremacy for decades to come.
The China-led EMA project is intended to compete directly with another cable currently under construction by US company SubCom LLC, called SeaMeWe-6 (Southeast Asia-Middle East-Western Europe-6), which will also connect Singapore to France, via Pakistan, Saudi Arabia, Egypt and half a dozen other countries along the way.
The SeaMeWe-6 cable consortium which originally included China Mobile, China Telecom, China Unicom and telecom operators from several other nations initially chose HMN Tech to build that cable. But a successful US government lobbying campaign overturned SubCom’s contract last year, Reuters reported in March.
The US blitz included awarding millions of dollars in grants to foreign telecommunications companies in exchange for choosing SubCom over HMN Tech. The US Department of Commerce also imposed sanctions on HMN Tech in December 2021, claiming the company intended to acquire American technology to help modernize China’s People’s Liberation Army. That move undermined the project’s viability by making it impossible for the owners of an HMN-built cable to sell bandwidth to U.S. technology companies, usually their biggest customers.
China Telecom and China Mobile withdrew from the project after SubCom won the contract last year and, together with China Unicom, began planning for the EMA cable, the four people involved said. China’s three state-owned telecommunications companies are expected to own more than half of the new network, but are also forging deals with foreign partners, the people said.
Chinese carriers signed separate memorandums of understanding with four telecom companies this year, the people said: Frances Orange SA, Pakistan Telecommunication Company Ltd (PTCL), Telecom Egypt and Zain Saudi Arabia, a unit of Kuwaiti company Mobile Telecommunications Company KSCP
The Chinese companies have also held talks with Singapore Telecommunications Limited, a state-controlled company commonly known as Singtel, while other countries in Asia, Africa and the Middle East have been approached to join the consortium, those involved said.
Orange declined to comment. Singtel, PTCL, Telecom Egypt and Zain did not respond to requests for comment.
US cable company SubCom declined to comment on the rival cable. The Justice Department, which oversees an interagency task force to safeguard US telecommunications networks from espionage and cyberattacks, declined to comment on the EMA cable.
A State Department spokesman said the US supports a free, open and secure internet. Countries should prioritize security and privacy by completely excluding untrusted providers from wireless networks, land and submarine cables, satellites, cloud services and data centers, the spokesman said, without mentioning HMN Tech or China. The State Department did not respond to questions about whether to organize a campaign to convince foreign telecommunications companies not to participate in the EMA cable project.
China’s foreign ministry said in its statement that it was against the United States’ “violation of established international rules” on submarine cable cooperation.
“The United States should stop fabricating and spreading rumors about so-called ‘data surveillance activities’ and stop slandering and disparaging Chinese companies,” the statement said.
DIVIDE THE WORLD
Large submarine cable projects typically take at least three years to go from concept to delivery. Chinese firms hope to finalize contracts by the end of the year and have EMA cable online by the end of 2025, those involved said.
The cable would give China strategic advantages in its fight with the United States, one of the people involved in the deal told Reuters.
First, it would create a new super-fast connection between Hong Kong, China and much of the rest of the world, something Washington wants to avoid. Second, it gives state-backed Chinese telecom carriers greater reach and protection should they be barred from US-backed cables in the future.
It’s as if each side is arming itself with bandwidth, said a telecommunications executive working on the deal.
The construction of US-Chinese-backed parallel cables between Asia and Europe is unprecedented, the four people involved in the project said. It’s an early sign that the global internet infrastructure, including wires, data centers and mobile phone networks, could fall apart over the next decade, two security analysts told Reuters.
Countries could also be forced to choose between using China-endorsed internet equipment or US-backed networks, entrenching divisions around the world and making the tools that power the global economy, such as online banking and satellite systems, global positioning, slower and less reliable, said Timothy Heath, a defense researcher at RAND Corporation, a US-based think tank.
We appear to be heading down a road where there will be a US-led internet and a China-led internet ecosystem, Heath told Reuters. The more the United States and China separate from each other in the domain of information technology, the more difficult it becomes to carry out global trade and basic functions.
Antonia Hmaidi, an analyst at the Mercator Institute for China Studies in Berlin, said the internet works so well because no matter where data has to travel, it can zip along multiple different paths in the time it takes to read this word.
Hmaidi said that if the data is to follow paths approved in Washington and Beijing, then it will become easier for the US and China to manipulate and spy on that data; Internet users will experience degradation of service; and it will become more difficult to interact or do business with people from all over the world.
Then suddenly the whole fabric of the Internet doesn’t work as expected, Hmaidi said.
The tit-for-tat battle over Internet hardware mirrors the ongoing conflict over social media apps and search engines created by US and Chinese companies.
The United States and its allies have banned Chinese-owned short-video app TikTok from government-owned devices due to national security concerns. A number of countries have raised concerns that the Chinese government could access the data TikTok collects about its users around the world.
China, meanwhile, already restricts the websites its citizens can see and blocks the apps and networks of many Western tech giants, including Google, YouTube, Facebook and Twitter.
Reporting by Joe Brock Additional reporting by Brenda Goh in Shanghai; Ryan Woo and Michel Rose in Beijing; Ariba Shahid in Karachi; Aziz El Yaakoubi in Riyadh and Silvia Aloisi in Paris Edited by Marla Dickerson
Our standards: the Thomson Reuters Trust Principles.
#Exclusive #China #Plans #Million #Undersea #Internet #Cable #Compete #USBacked #Project