A new regional undersea fiber optic project being eyed by a Chinese company will connect to an existing cable being used by the U.S. government, thus raising concerns about the threat of Beijing's espionage.
Reuters earlier reported that Huawei Marine has submitted a bid for an undersea internet cable project that will connect the Federated States of Micronesia, Nauru and Kiribati.
Huawei Marine is competing with Alcatel Submarine Networks, part of Finland's Nokia and Japan's NEC for the $72.6 million East Micronesia Cable (EMC) project.
According to a grant proposal submitted by the three island nations in February 2017, the EMC project will link to the existing Hannon-Armstrong (HANTRU)-1 cable, which currently connects the FSM state of Pohnpei to Guam. HANTRU-1, which is primarily used by the U.S. government, connects the Reagan Test Site in the Kwajalein Atoll to Guam.
“Washington sent a diplomatic note to FSM in July expressing strategic concerns about the project as Huawei Marine and other Chinese firms are required to co-operate with Beijing's intelligence and security services,” Reuters reported, citing two unnamed sources.
Huawei Marine is among the Chinese companies banned by the U.S. government, alarmed by China’s massive use of technology to steal data.
Huawei Marine is the same company that built the Sorsogon-Samar Submarine Fiber Optical Interconnection Project in the Philippines. According to its website, Huawei Marine has 105 projects as of this year.
“While the project, called the East Micronesia Cable project, could be split up, Huawei Marine's bids in the procurement process are more than 20 percent below rivals,” Reuters said, quoting its sources. “This has created an impasse, the sources said, given on a pure cost basis Huawei Marine is in a strong position to win the bid due to the terms overseen by the development agencies.”
The U.S. has been wary of Beijing’s spying activity that is part of its scheme to transform its military into a major global power. In a report released last year, the Pentagon said China was using espionage to steal cutting edge technology for military purposes.
"China uses a variety of methods to acquire foreign military and dual-use technologies, including targeted foreign direct investment, cyber theft, and exploitation of private Chinese nationals' access to these technologies, as well as harnessing its intelligence services, computer intrusions, and other illicit approaches," the congressionally mandated Department of Defense report said.
The East Micronesia Cable project is supported by the World Bank and Asian Development Bank.
On March 27, the World Bank announced the approval of a $30.8 million grant to cover the FSM segment of the project.
In April 2018, ADB awarded Kiribati $21.6 million and Nauru, $15 million to cover their share of the project cost.
“The project will complement the ongoing and existing cable systems connecting all the major islands in the North Pacific region,” Emma Veve, director in ADB’s Pacific Department said in a statement announcing the grant award. “The cable project will connect the Micronesian subregion to the rest of the world and provide the potential for faster, more affordable internet.”