Known as EMA (Europe-Middle East-Asia), the proposed cable would link Hong Kong to China’s island province of Hainan, before snaking its way to Singapore, Pakistan, Saudi Arabia, Egypt and France, the four people said. They asked not to be named because they were not allowed to discuss potential trade secrets.

The cable, which would cost approximately $500 million to complete, would be manufactured and laid by China’s HMN Technologies Co Ltd, a fast-growing cable firm whose predecessor company was majority-owned by Chinese telecom giant Huawei Technologies Co Ltd, the people said.

They said HMN Tech, which is majority-owned by Shanghai-listed Hengtong Optic-Electric Co Ltd, would receive subsidies from the Chinese state to build the cable.

China Mobile, China Telecom, China Unicom, HMN Tech, and Hengtong did not respond to requests for comment.

The Chinese foreign ministry said in a statement to Reuters that it “has always encouraged Chinese enterprises to carry out foreign investment and cooperation” without commenting directly on the EMA cable project.

News of the planned cable comes in the wake of a Reuters report last month that revealed how the U.S. government, concerned about Beijing eavesdropping on internet data, has successfully thwarted a number of Chinese undersea cable projects abroad over the past four years. Washington has also blocked licenses for planned private subsea cables that would have connected the United States with the Chinese territory of Hong Kong, including projects led by Google LLC, Meta Platforms, Inc and Amazon.com Inc.

Undersea cables carry more than 95% of all international internet traffic. These high-speed conduits for decades have been owned by groups of telecom and tech companies that pool their resources to build these vast networks so that data can move seamlessly around the world.

But these cables, which are vulnerable to spying and sabotage, have become weapons of influence in an escalating competition between the United States and China. The superpowers are battling to dominate the advanced technologies that could determine economic and military supremacy in the decades ahead.

The China-led EMA project is intended to directly rival another cable currently being constructed by U.S. firm SubCom LLC, called SeaMeWe-6 (Southeast Asia-Middle East-Western Europe-6), which will also connect Singapore to France, via Pakistan, Saudi Arabia, Egypt, and half a dozen other countries along the route.

The consortium on the SeaMeWe-6 cable – which originally had included China Mobile, China Telecom, China Unicom and telecom carriers from several other nations – initially picked HMN Tech to build that cable. But a successful U.S. government pressure campaign flipped the contract to SubCom last year, Reuters reported in March.

The U.S. blitz included giving millions of dollars in training grants to foreign telecom firms in return for them choosing SubCom over HMN Tech. The U.S. Commerce Department also slapped sanctions on HMN Tech in December 2021, alleging the company intended to acquire American technology to help modernize China’s People’s Liberation Army. That move undermined the project’s viability by making it impossible for owners of an HMN-built cable to sell bandwidth to U.S. tech firms, usually their biggest customers.

China Telecom and China Mobile pulled out of the project after SubCom won the contract last year and, along with China Unicom, began planning the EMA cable, the four people involved said. The three state-owned Chinese telecom firms are expected to own more than half of the new network, but they are also striking deals with foreign partners, the people said.

The Chinese carriers this year signed separate memoranda of understanding with four telecoms, the people said: France’s Orange SA, Pakistan Telecommunication Company Ltd (PTCL), Telecom Egypt and Zain Saudi Arabia, a unit of the Kuwaiti firm Mobile Telecommunications Company K.S.C.P.

The Chinese companies have also held talks with Singapore Telecommunications Limited, a state-controlled firm commonly known as Singtel, while other countries in Asia, Africa and the Middle East are being approached to join the consortium as well, the people involved said.

Orange declined to comment. Singtel, PTCL, Telecom Egypt and Zain did not respond to requests for comment.

American cable firm SubCom declined to comment on the rival cable. The Department of Justice, which oversees an interagency task force to safeguard U.S. telecommunication networks from espionage and cyberattacks, declined to comment about the EMA cable.

A State Department spokesperson said the U.S. supports a free, open and secure internet. Countries should prioritize security and privacy by “fully excluding untrustworthy vendors” from wireless networks, terrestrial and undersea cables, satellites, cloud services and data centers, the spokesperson said, without mentioning HMN Tech or China. The State Department did not respond to questions about whether it would mount a campaign to persuade foreign telecoms not to participate in the EMA cable project.

The Chinese foreign ministry said in its statement that it was opposed to the United States’ “violation of established international rules” around submarine cable cooperation.

“The U.S. should stop fabricating and spreading rumours about so-called ‘data surveillance activities’ and stop slandering and smearing Chinese companies,” the statement said.

Large undersea cable projects typically take at least three years to move from conception to delivery. The Chinese firms are hoping to finalize contracts by the end of the year and have the EMA cable online by the end of 2025, the people involved said.

The cable would give China strategic gains in its tussle with the United States, one of the people involved in the deal told Reuters.

Firstly, it would create a super-fast new connection between Hong Kong, China and much of the rest of the world, something Washington wants to avoid. Secondly, it gives China’s state-backed telecom carriers greater reach and protection in the event they are excluded from U.S.-backed cables in the future.

“It’s like each side is arming itself with bandwidth,” one telecom executive working on the deal said.

The construction of parallel U.S.- and Chinese-backed cables between Asia and Europe is unprecedented, the four people involved in the project said. It is an early sign that global internet infrastructure, including cables, data centers and mobile phone networks, could become divided over the next decade, two security analysts told Reuters.

Countries could also be forced to choose between using Chinese-approved internet equipment or U.S.-backed networks, entrenching divisions across the world and making tools that fuel the global economy, like online banking and global-positioning satellite systems, slower and less reliable, said Timothy Heath, a defense researcher at the RAND Corporation, a U.S.-based think tank.

“It seems we are headed down a road where there will be a U.S.-led internet and a Chinese-led internet ecosystem,” Heath told Reuters. “The more the U.S. and Chinese disengage from each other in the information technology domain, the more difficult it becomes to carry out global commerce and basic functions.”

Antonia Hmaidi, an analyst at the Berlin-based Mercator Institute for China Studies, said the internet works so well because no matter where data needs to travel, it can zip along multiple different routes in the time it takes to read this word.

Hmaidi said if data has to follow routes that are approved in Washington and Beijing, then it will become easier for the United States and China to manipulate and spy on that data; internet users will suffer a degradation of service; and it will become more difficult to interact or do business with people around the world.

“Then suddenly the whole fabric of the internet doesn’t work as it was intended,” Hmaidi said.

The tit-for-tat battle over internet hardware mirrors the conflict taking place over social media apps and search engines created by U.S. and Chinese firms.

The United States and its allies have banned the use of Chinese-owned short video app TikTok from government-owned devices due to national security concerns. Numerous countries have raised fears about the Chinese government gaining access to the data that TikTok collects on its users around the world.

China, meanwhile, already restricts what websites its citizens can see and blocks the apps and networks of many Western technology giants, including Google, YouTube, Facebook and Twitter.