SINGAPORE: Chinese state-owned telecom firms are developing a $500 million undersea fibre-optic internet cable network to competing with a similar US-backed project, according to four people involved in the deal.
The plan indicates an intensifying tech war between Beijing and Washington risks tearing the internet’s fabric apart.
According to four people with direct knowledge of the plan, China’s three main carriers – China Telecommunications Corporation (China Telecom), China Mobile Limited, and China United Network Communications Group Co Ltd (China Unicom) – are planning one of the world’s most advanced and far-reaching subsea cable networks.
The proposed EMA (Europe-Middle East-Asia) cable would connect Hong Kong to China’s island province of Hainan before snaking its way to Singapore, Pakistan, Saudi Arabia, Egypt, and France, according to the four people. They requested anonymity because they were not permitted to discuss potential trade secrets.
According to the people, the cable would be manufactured and laid by China’s HMN Technologies Co Ltd, a fast-growing cable firm whose predecessor company was majority-owned by Chinese telecom giant Huawei Technologies Co Ltd.
They stated that HMN Tech, majority-owned by Shanghai-listed Hengtong Optic-Electric Co Ltd, would receive state subsidies to build the cable. China Mobile, China Telecom, China Unicom, HMN Tech, and Hengtong all declined to comment.
The Chinese foreign ministry stated that it “has always encouraged Chinese enterprises to carry out foreign investment and cooperation,” without directly commenting on the EMA cable project.
The US government has successfully thwarted several Chinese undersea cable projects abroad over the past four years. Licenses for planned private subsea cables connecting the United States to the Chinese territory of Hong Kong have also been blocked by Washington, including projects led by Google LLC, Meta Platforms, Inc, and Amazon.com Inc. Submarine cables carry more than 95% of all international internet traffic.
For decades, these high-speed conduits have been owned by groups of telecom and technology companies that pool their resources to build these vast networks that allow data to move seamlessly around the world.
However, in an escalating competition between the United States and China, these cables, vulnerable to spying and sabotage, have become weapons of influence. The superpowers compete to control advanced technologies that will determine economic and military dominance in the coming decades.
The China-led EMA project will compete directly with another cable currently built by US firm SubCom LLC, called SeaMeWe-6 (Southeast Asia-Middle East-Western Europe-6), which will connect Singapore to France via Pakistan, Saudi Arabia, Egypt, and a half-dozen other countries along the route.
The SeaMeWe-6 cable consortium, which originally included China Mobile, China Telecom, China Unicom, and telecom carriers from several other countries, chose HMN Tech to build the cable. However, a successful US government pressure campaign awarded the contract to SubCom last year.
The US blitz included offering foreign telecom firms millions of dollars in training grants in exchange for choosing SubCom over HMN Tech.
In December 2021, the US Commerce Department imposed sanctions on HMN Tech, alleging that the company intended to acquire American technology to help modernise China’s People’s Liberation Army. This decision undermined the project’s viability by making it impossible for owners of an HMN-built cable to sell bandwidth to US-based tech firms, usually their biggest customers.
According to the four people involved, China Telecom and China Mobile dropped out of the project after SubCom won the contract last year and began planning the EMA cable with China Unicom. According to the people, the three state-owned Chinese telecom firms are expected to own more than half of the new network but are also striking deals with foreign partners.
According to the sources, the Chinese carriers signed separate memoranda of understanding with four telecoms this year: France’s Orange SA, Pakistan Telecommunication Company Ltd (PTCL), Telecom Egypt, and Zain Saudi Arabia, a unit of Kuwait’s Mobile Telecommunications Company KSCP.
According to a State Department spokesperson, the United States supports a free, open, and secure internet. Countries should prioritise security and privacy by “completely excluding untrustworthy vendors” from wireless networks, terrestrial and undersea cables, satellites, cloud services, and data centres, the spokesperson said, who did not name HMN Tech or China.
In a statement, the Chinese foreign ministry stated that it opposed the United States’ “violation of established international rules” regarding submarine cable cooperation.
According to the statement, the US should stop fabricating and spreading rumours about so-called “data surveillance activities” and slandering and smearing Chinese companies.
