China Pulls Back From Global Subsea Cable Project As US Tensions Mount

By Anna Gross and Alexandra Heal, Financial Times
February 10, 2023

China has cut its participation in an internet cable project to link Asia with Europe, as tensions grow between Washington and Beijing over control of the physical infrastructure that transmits the world’s online traffic.

Two of China’s biggest telecoms groups, China Telecom and China Mobile, withdrew their combined investment of roughly 20 per cent from the subsea cable project last year after a US company was selected to build the line over Hengtong Marine, the country’s biggest provider in the sector, according to three people briefed on the decision.

Their exit from the Sea-Me-We 6 pipeline — which is estimated to cost around $500mn to lay 19,200km of cables connecting south-east Asia to western Europe — highlights the growing battle between China and the US over who builds and owns the infrastructure underpinning the global internet.

The departure of China Mobile and China Telecom is an indication of intensifying tensions between Washington and Beijing, according to industry figures with knowledge of the project. Another member of the consortium described their involvement as “important but not critical”.

China Unicom, a much smaller state-owned company, has remained involved with an unspecified investment in the project, which is expected to complete in 2025.

Since 2020, the US has denied permission for several subsea telecoms cables that involved Chinese companies or directly connected the US to mainland China or Hong Kong, citing national security concerns.

The strained Sino-US relationship is reshaping the global technology sector, as companies and countries are forced to respond to the pressure exerted by the two economic powerhouses.

Last October, Washington unveiled tough export controls to prevent China obtaining advanced chips or securing the technology and equipment to make high-end semiconductors domestically.

The Sea-Me-We 6 consortium, which includes Microsoft, Orange and Telecom Egypt, opted for US company SubCom to build the line rather than the bid from Hengtong Marine — prompting the two Chinese state-owned groups to exit, the people said.

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