{"id":1287,"date":"2017-02-06T17:27:59","date_gmt":"2017-02-06T17:27:59","guid":{"rendered":"https:\/\/jsis.washington.edu\/eacenter\/?p=1287"},"modified":"2017-02-06T17:27:59","modified_gmt":"2017-02-06T17:27:59","slug":"cybersecurity-implications-chinese-undersea-cable-investment","status":"publish","type":"post","link":"https:\/\/jsis.washington.edu\/eacenter\/2017\/02\/06\/cybersecurity-implications-chinese-undersea-cable-investment\/","title":{"rendered":"The Cybersecurity Implications of Chinese Undersea Cable Investment"},"content":{"rendered":"

In 2013, BRICS business leaders announced plans to construct a $185 million submarine cable connecting Brazil, Russia, India, China, and South Africa. However, more than three years later, the BRICS cable has not come to fruition, presumably due to intra-bloc political differences and challenging domestic economic positions<\/a>.<\/p>\n

China is filling the vacuum left by the BRICS cable. Its companies are the most active investors and builders of submarine cables in the developing world<\/a>. Between 2012 and 2015, Chinese companies were involved with only 7% of disclosed global submarine cable projects, and exclusively with projects that connected either to the Chinese Mainland, Taiwan, or Hong Kong. In contrast, between 2016 and 2019, Chinese companies will participate in 20% of all cable construction projects, over half of which take place outside the South China Sea.<\/p>\n

Chinese companies lag\u00a0behind only the French company Alcatel-Lucent<\/a>\u00a0and the Swiss-owned TE Connectivity<\/a>\u00a0in total future submarine cable project activity. While Alcatel and TE Connectivity have had decades to expand and engage with the global market, the market share gained by Chinese companies in a relatively short period of time may signal Chinese market dominance in the near future. The meteoric rise of Chinese companies in submarine cable ownership and construction makes it abundantly clear that the Chinese are here to make an impact on the world of Internet infrastructure.<\/p>\n

Chinese Cable Consortiums and Construction Projects<\/h2>\n

Chinese state-owned telecommunications companies are actively expanding their network of cable consortium partnerships. China Unicom, China Telecom, and China Mobile are three state-owned telecommunications providers listed as owners of the new SeaMeWe-5<\/a> cable connecting Europe, the Middle East, and Southeast Asia. Whereas Chinese companies have traditionally participated only in projects that directly involving Chinese territory, Chinese companies are also investing beyond Asia; for example, China Unicom shares ownership of a cable connecting Cameroon and Brazil<\/a>.<\/p>\n

While state-owned companies join cable ownership consortiums, Huawei Marine Systems is installing multiple submarine cables throughout the world. A 2008 joint venture between the Chinese technology giant Huawei and the British company Global Marine Systems, Huawei Marine Systems is making headlines for its work in Africa. At AfricaCom 2016, Huawei announced<\/a> plans to build eight new cable systems (two of which are included in the count above, six more of which remain to be announced) connecting the continent and upgrade two existing cables. In the last year, Huawei has also been commissioned to build cables connecting Malaysia, Cambodia, and Thailand<\/a>, build a national broadband transmission network for Papua New Guinea<\/a>, construct a new cable for Belize<\/a>, and partner with LTI on a cable project in Indonesia<\/a>. Recently completed cables include a joint venture with Ooredoo<\/a> in the Maldives, and AVASSA<\/a>, Huawei\u2019s tenth project in Africa.<\/p>\n

China\u2019s New Global Orientation in Political Context<\/h2>\n

China\u2019s rise as a formidable player in ICT development may stem from domestic business policy. Around 2015, the Chinese government gave its telecommunications companies permission to fully expand globally<\/a>. Before, Chinese companies were more restricted in their global reach, although Huawei managed to participate in a few cable projects, including one connecting Suriname and Guiana<\/a>, which raised eyebrows as early as 2010. China\u2019s ICT expansion is in line with China\u2019s desire to expand its global reach.<\/p>\n

For example, Huawei\u2019s involvement in Africa largely mirrors other investments in non-digital regional infrastructure<\/a>, which increases China\u2019s influence, helps foster new markets for Chinese goods, and provides Beijing with valuable access to natural resources and agriculture. In other words, sending Chinese telecoms abroad through ownership and construction contracts may ultimately fall in line with Beijing\u2019s long-term political and economic goals.<\/p>\n

Demand for Chinese investment and construction is also fueled by a global political climate wary of Western, particularly American<\/a>, Internet infrastructure. While the BRICS cable may be indefinitely stalled, demand for a BRICS-like cable persists. The elevated role of Chinese telecommunications companies in owning and constructing submarine cables responds to this demand by providing an alternative to previously dominant American-led consortiums. Additionally, many Western cable companies have stopped investing in new cables due to their limited financial returns and the omnipotence of Western connectivity<\/a>. China remains one of the few partners available to countries seeking to grow their connectivity through undersea cables.<\/p>\n

International Cybersecurity Consequences<\/h2>\n

It is clear that Chinese telecommunications companies are increasing their global orientation and that international contracts may be politically expedient for the Chinese government and amenable to the needs of developing nations. However, many aspects of growing Chinese international activity are opaque. It is unclear how heavily Beijing weighs in on specific decisions, especially in the investment decisions of state-owned companies. The same lack of transparency regarding state and company relationship extends to Huawei Marine Systems, which essentially purchases its market share by offering extraordinarily cost-efficient installation prices<\/a>. Since constructing submarine cables is often prohibitively expensive, it is a mystery how Huawei remains solvent. Huawei has repeatedly denied<\/a> receiving subsidies from the government, although Western companies insist that Huawei does in fact receive illegal government assistance, and have been successful at blacklisting Huawei from certain projects<\/a> in the West.<\/p>\n

Concerns over Chinese telecommunications companies\u2019 independence yield important political considerations. While Chinese investment may prove affordable and attractive, history dictates that reliance upon Chinese infrastructure can have deleterious and politically-motivated cybersecurity consequences \u2013 one need only consider the case of Vietnam, where Chinese investors have dominated both physical and digital infrastructure development<\/a>. When Vietnam expressed its disapproval of China\u2019s position on the South China Sea, Chinese investors froze cash flows<\/a> to projects, leaving Vietnam in limbo. Chinese hackers have also exploited their knowledge of Vietnam\u2019s airport systems \u2013 which were provided by the Chinese \u2013 to hack and suspend airport computers as well as airline websites<\/a>. The confluence of extreme Chinese infrastructure dependence and politics in South Asia may not extend to other nations with which China is doing business, but sets a precedent that may leave the international community wary of Chinese partnerships.<\/p>\n

Further yet, the Chinese government\u2019s propensity for digital surveillance<\/a> leaves one questioning the supposedly apolitical nature of increased global cable development. Even if the Chinese aren\u2019t building backdoors into their cables now, they certainly have the potential to do so in the future, and the blurry line between private companies and state interest render cables increasingly accessible to Beijing. It is somewhat curious that the same countries that avoid American Internet infrastructure due to spying may ultimately be signing up for Chinese surveillance.<\/p>\n

Conclusion<\/h2>\n

Time will reveal the true nature of Chinese Internet infrastructure relationships \u2013 are they purely objects of business that expand Chinese soft power or are they tools created for political abuse? Without greater transparency in ownership structure and an understanding of their political independence, there is plenty of room for speculation that Chinese infrastructure investments are the latter.<\/p>\n

Works Cited<\/h2>\n

\u201cAbout the SEA-ME-WE 5 Submarine Cable.\u201d SEA-ME-WE 5<\/em>. Accessed December 18, 2016.\u00a0<\/a><\/p>\n

Bowring, Gavin. \u201cVietnam Yields Cautionary Tale over Chinese Investment.\u201d Financial Times<\/em>, November 27, 2014.\u00a0<\/a><\/p>\n

Fuhrman, Peter. \u201cGovernment Cyber-Surveillance Is the Norm in China \u2014 and It\u2019s Popular.\u201d The Washington Post<\/em>, January 29, 2016.\u00a0<\/a><\/p>\n

\u201cHuawei Delivers Avassa Submarine Cable System.\u201d Telecompaper<\/em>, November 2016.<\/a><\/p>\n

\u201cHuawei Denies Using Chinese Subsidies to Grab More Business.\u201d Reuters<\/em>, June 23, 2012.\u00a0<\/a><\/p>\n

\u201cHuawei, LTI Partner on Middle Package of Palapa Ring Project.\u201d Subsea World News<\/em>. Accessed December 18, 2016.\u00a0<\/a><\/p>\n

\u201cHuawei Marine and Global Marine Systems Complete Construction of the Suriname-Guyana Submarine Cable System.\u201d Submarine Telecoms Forum<\/em>, May 28, 2010.\u00a0<\/a><\/p>\n

\u201cHuawei Marine Is Contracted to Build Cameroon-Brazil Trans-Atlantic Submarine Cable to Connect Africa to Latin America.\u201d Global Marine Systems<\/em>, n.d.\u00a0<\/a><\/p>\n

\u201cHuawei to Build PNG Submarine Cable Network.\u201d Radio New Zealand<\/em>, October 13, 2016.\u00a0<\/a><\/p>\n

Kuo, Mercy A., and Angela O. Tang. \u201cChina\u2019s Africa Strategy: Going Global With Infrastructure Investment.\u201d The Diplomat<\/em>. Accessed December 18, 2016.<\/a><\/p>\n

\u201cOoredoo, Huawei Marine Inaugurate National Submarine Cable in Maldives.\u201d -Voice&Data<\/em>, December 17, 2016.\u00a0<\/a><\/p>\n

Qiu, Winston. \u201cWhy It Is China\u2019s Turn to Lead the Submarine Cable Industry | Telecom Ramblings,\u201d February 11, 2014.\u00a0<\/a><\/p>\n

Saeed, Baber. \u201cHere\u2019s Why Chinese Telecom Companies Are Diving Deep in to the Ocean.\u201d China Business News<\/em>, December 29, 2015.\u00a0<\/a><\/p>\n

\u201cSouth China Sea: Vietnam Airport Screens Hacked.\u201d BBC News<\/em>, July 29, 2016, sec. Asia.\u00a0<\/a><\/p>\n

\u201cSubmarine Telecoms Industry Report 2014,\u201d 2014.<\/a><\/p>\n

\u201cSubmarine Telecoms Industry Report 2016,\u201d 2016.\u00a0<\/a><\/p>\n

\u201cWith 4G Network and Fiber, Huawei Is Putting Belize on the Digital Map.\u201d RCR Wireless News<\/em>, August 24, 2016.\u00a0<\/a><\/p>\n

Yu, Eileen. \u201cHuawei to Build Subsea Cables Connecting Malaysia, Cambodia, Thailand.\u201d ZDNet<\/em>. Accessed December 18, 2016.\u00a0<\/a><\/p>\n

\u201cZambia\u202f: Connectivity, Digital Services and Applications: Huawei\u2019s Key Focus for Africa\u2019s ICT Development.\u201d Accessed December 18, 2016.\u00a0<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

In 2013, BRICS business leaders announced plans to construct a $185 million submarine cable connecting Brazil, Russia, India, China, and South Africa. However, more than three years later, the BRICS cable has not come to fruition, presumably due to intra-bloc political differences and challenging domestic economic positions. China is filling the vacuum left by the<\/p>\n

Read more<\/a><\/div>\n","protected":false},"author":506,"featured_media":1289,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[9,12],"tags":[17],"class_list":["post-1287","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","category-student","tag-china"],"acf":[],"yoast_head":"\nThe Cybersecurity Implications of Chinese Undersea Cable Investment - East Asia Center<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/jsis.washington.edu\/eacenter\/2017\/02\/06\/cybersecurity-implications-chinese-undersea-cable-investment\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Cybersecurity Implications of Chinese Undersea Cable Investment - East Asia Center\" \/>\n<meta property=\"og:description\" content=\"In 2013, BRICS business leaders announced plans to construct a $185 million submarine cable connecting Brazil, Russia, India, China, and South Africa. 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