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China To Build $500 Million Undersea Cable Network To Compete With US

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A $500 million undersea fibre-optic internet cable network connecting Asia, the Middle East, and Europe is being developed by state-owned Chinese telecom companies to compete with a competitive US-backed project, according to four persons engaged in the arrangement.

The strategy is a warning that an escalating digital conflict between Beijing and Washington runs the risk of rupturing the web’s infrastructure.

According to the four people with direct knowledge of the plan, China’s three major carriers, China Telecommunications Corporation (China Telecom), China Mobile Limited, and China United Network Communications Group Co Ltd (China Unicom), are developing one of the most cutting-edge and extensive subsea cable networks in the world.

The proposed cable, known as EMA (Europe-Middle East-Asia), would connect Hong Kong to the Chinese province of Hainan before winding its way to Singapore, Pakistan, Saudi Arabia, Egypt, and France, according to the four persons. They requested anonymity since they were forbidden from talking about potential trade secrets.

The people added that China’s HMN Technologies Co Ltd, a rapidly expanding cable company whose parent company was majority-owned by Chinese telecom giant Huawei Technologies Co Ltd, would construct and lay the cable, which would cost about $500 million to complete.

They claimed that the Chinese government would provide financial aid to HMN Tech, which is majority owned by the Hengtong Optic-Electric Co Ltd, a company listed on the Shanghai Stock Exchange.

Without specifically addressing the EMA cable proposal, the Chinese foreign ministry stated in a statement to Reuters that it “has always encouraged Chinese enterprises to carry out foreign investment and cooperation.”

The announcement of the cable comes after a Reuters article last month that detailed how the U.S. government has successfully stopped a number of Chinese underwater cable projects abroad over the past four years out of worry that Beijing could be listening in on internet traffic. The United States and Hong Kong, a territory of China, would have been connected by planned private undersea cables, including initiatives sponsored by Google LLC, Meta Platforms, Inc., and Amazon.com Inc.

More than 95% of all international internet traffic travels on submarine cables. For many years, consortia of telecom and technology corporations have held these high-speed channels, pooling their resources to create these enormous networks that enable seamless data transfer throughout the globe.

According to the sources, the Chinese carriers inked separate memorandums of understanding with four telecoms this year: Zain Saudi Arabia, a division of the Kuwaiti company Mobile Telecommunications Company K.S.C.P., Telecom Egypt, Pakistan Telecommunication Company Ltd., and France’s Orange SA.

The Chinese businesses have also discussed joining the partnership with Singapore Telecommunications Limited (Singtel), a state-controlled company, and other nations in Asia, Africa, and the Middle East are also being approached, according to those involved.

The American blitz included offering foreign telecom companies training subsidies worth millions of dollars in exchange for them picking SubCom over HMN Tech. In December 2021, the US Commerce Department imposed penalties on HMN Tech as well on the grounds that the business planned to buy American technology to aid in the modernization of China’s People’s Liberation Army. This action made it impossible for owners of HMN-built cables to sell bandwidth to American IT companies, which are typically those companies’ largest clients, undermining the project’s viability.

From conception to completion, large underwater cable projects normally require at least three years. According to those engaged, the Chinese companies plan to complete their contracts by year’s end and launch the EMA cable by the end of 2025.

According to one of those involved in the arrangement, the cable would give China advantages in its conflict with the United States.

First of all, USA wants to prevent the development of a brand-new, extremely fast connection between Hong Kong, China, and much of the rest of the globe. Second, it expands the reach and protection of China’s state-backed telecom operators in case they are ever cut off from US-backed cables.

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