By Reuters Staff Writer
December 25, 2020

SYDNEY,  (Reuters) – Prominent U.S. lawmakers warned a Pacific ally that China risked undermining the security of a sensitive undersea cable project if a cut-price, state-backed bid wins a tender process overseen by development agencies, a letter reviewed by Reuters shows.

A Chinese foreign ministry spokesman today rejected the accusation as lies.

In the letter dated Sept. 18, Republican senators Ted Cruz and Marco Rubio told the Federated States of Micronesia (FSM) that China could leverage its way into the project to wage “campaigns of espionage and geopolitical coercion”. Beijing recently imposed symbolic sanctions on both Cruz and Rubio.

Reuters reported last week that Huawei Marine, recently divested from Huawei Technologies Co Ltd and now majority-owned by another Chinese firm, submitted bids priced at more than 20% lower than two rivals for the $72.6 million project funded by the World Bank and the Asian Development Bank (ADB).

Washington has pressed governments around the world to squeeze Huawei Technologies Co Ltd out of supplying critical infrastructure, alleging the company would hand over data to the Chinese government for spying, a charge consistently denied by the company.

The cable project is designed to improve communications to the remote Pacific island nations of Micronesia, Nauru and Kiribati, although it has reached an impasse at the bid assessment stage, two sources with direct knowledge of the project details told Reuters. All parties involved have input on the selection of the tender winner.

The people with knowledge of the situation declined to be identified because of the sensitivity of the project.

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