The US-China tech cold war is moving undersea

Tech giants are rerouting subsea cables to avoid geopolitical conflict, shaping Asia’s digital map for decades to come

• By Ruth Pollard / Bloomberg Opinion

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When Australian Minister for Defence Richard Marles described the seabed as a battlefield at a regional defense gathering in Singapore earlier this year, he was preaching to the converted. The security of undersea cables — which carry more than 95 percent of data flows and trillions of dollars of daily financial transactions — was already top of mind for the senior military brass, geopolitical analysts and government ministers in the room.

A new project by Australia, the UK and the US was quickly announced to develop underwater drone technology to protect cables by next year, while Singapore launched a 17-country framework covering Southeast Asia, Europe, the Middle East and Oceania to explore defense cooperation on critical infrastructure.

However, while nations are racing to defend existing networks, the companies building Southeast Asia’s digital architecture face a different challenge: avoiding maritime bottlenecks and the risk posed by China’s expanding sea presence. The Strait of Malacca, the narrow passage between Indonesia, Malaysia and Singapore, is particularly vulnerable due to the sheer concentration of cables traversing the corridor.

Illustration: Kevin Sheu

Already considered the Indo-Pacific region’s most critical chokepoint — it handles about 21 percent of global maritime trade by value — the Strait is increasingly being bypassed by major private subsea cable projects. Google’s TalayLink, for instance, would connect Australia and Thailand via the Indian Ocean following a route west of the Sunda Strait that avoids the congested corridor.

However, concentration is not the only risk. Nowhere is the geopolitical contest over cable routes more evident than in the South China Sea, where China is using regulation and maritime enforcement to control who can build and repair cable infrastructure across the contested waters. Beijing is effectively trying to redraw the undersea cable map, while the US and its partners are finding new ways to push back.

Google and Meta Platforms Inc’s Echo cable — which links the US to Singapore via Guam and Indonesia — shows how tech companies are redesigning Asia-Pacific networks to reduce their exposure to China. These giants have decided that avoiding Beijing is worth the added costs and the risk of laying cables in less suitable terrain.

Of course, it is tempting to dismiss this as yet more collateral damage from the US-China competition, but it will have long-lasting consequences. The routes chosen for this eye-wateringly expensive critical infrastructure will impact the region for decades to come, cementing ties between nations and increasingly isolating others.

Samuel Bashfield, a research fellow at Melbourne-based La Trobe University and the author of two books including one on submarine cables, has written that installers are increasingly wary of working in the South China Sea, with many avoiding the area altogether.

Beyond deploying Chinese Coast Guard ships to harass repair crews or prevent them from accessing the cable grounds, Beijing has effectively locked out non-Chinese subsea fiber projects through onerous permitting requirements, he said. These delays have forced some new projects to reroute entirely, hugging coastlines and plowing cables into shallow seabeds, a less-than-ideal solution for network resilience, Bashfield said.

The US$700 million Asia Connect Cable System, led by start-up Inligo Networks, for example, would skirt the South China Sea by running through Indonesia and the Philippines. The Pacific Light Cable Network, linking the US to Taiwan and the Philippines, underwent a similar transformation after its planned Hong Kong connection was abandoned following US intervention.

The US has devoted considerable effort to convince Southeast Asian and Pacific nations to shun Chinese vendors in favor of US, Japanese or European alternatives. Both superpowers fear that foreign involvement in cable infrastructure could enable intelligence gathering or sabotage. Washington regards Chinese technology as a security risk, while Beijing has raised similar concerns about US and Japanese equipment.

Amid mounting US scrutiny, Huawei Technologies Co agreed in 2019 to sell its 51 percent stake in Huawei Marine Networks to China’s Hengtong Optic-Electric, which also acquired its British partner’s interest. The cable-building business was subsequently renamed HMN Technologies Co, but its ownership and technological origins mean the US and allies such as Japan and Australia want to reduce its use across Asia.

They have clocked up some recent successes: In August, Australia announced that every Pacific Islands Forum member was connected to the global undersea cable network for the first time. That was a significant achievement, but it does not mean that Chinese companies have been excluded from the Pacific altogether.

The next battleground is data centers. Countries financing submarine cables would also need to help build the infrastructure needed to store and process data locally, or risk Chinese suppliers filling that gap.

Much of that work would fall to Japan, which plays a critical role as a manufacturer and a connectivity hub between North America and Asia. NEC Corp alone is one of the world’s largest subsea cable builders. Tokyo needs to utilize groupings such as the Quad grouping of the US, Japan, India and Australia, as well as the ASEAN to bolster systems in the Indo-Pacific region and expand cable-laying capacity to help reduce China’s dominance.

ASEAN leaders are due to gather in Manila next month, where a Quad leaders’ meeting is also planned. Undersea cable security should be high on their agenda.

However, there is an irony in efforts to curb Beijing’s influence over critical cable routes: Much of that power is instead concentrating in the hands of a small group of US technology giants. What could possibly go wrong?

Ruth Pollard is a Bloomberg Opinion columnist covering Asia politics and policy. She previously covered South and Southeast Asia on the Bloomberg government team and was Middle East correspondent for the Sydney Morning Herald. This column reflects the personal views of the author and does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.