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US officials prepare to block data cable with China

China's President Xi Jinping. (Alexei Nikolsky/Russian Presidential Press and Information Office/TASS/Abaca Press/TNS)
August 28, 2019

The Justice Department is preparing to intervene on an ongoing telecommunications project backed by Google and Facebook, citing close ties by the project’s Chinese partner and the Chinese government.

The Wall Street Journal reported Wednesday that the Justice Department is reviewing options to block the ongoing Pacific Light Cable Network project after concerns arose around the involvement of Dr. Peng Telecom & Media Group Co. Dr Peng is China’s fourth largest telecom company and has completed several projects for the Chinese government, including a fiber-optic surveillance system for Beijing Police.

The Justice Department also cited growing tension over ongoing Hong Kong protests in its reasoning over added scrutiny to the telecoms project. Yang Xueping, Dr. Peng’s chairman, is a former government official from Shenzhen, the Chinese city linking Hong Kong to the mainland. The new cable would have acted as a connection between Los Angeles and Hong Kong.

The project, which has already laid around 6,800 miles of telecommunications cables across the Pacific under a temporary permit that expires in September, may not receive the renewed licensing it needs to complete the 8,000 miles in total for the project. The project bears a cost estimate of $300 million.

A multiagency Justice Department panel, known as Team Telecom, has approved similar cables between the U.S. and China once the U.S. side of the effort met guidelines to prevent foreign blocking or monitoring of communications traffic. Firms in the U.S. like Google and Facebook have promoted similar telecoms efforts and the new cable would have provided greater communications bandwidth with Hong Kong and mainland China, as well as markets in the Philippines, Malaysia and Indonesia.

While the Federal Communications Commission has the final decision, it most often defers to the recommendations of Team Telecom. Last year, Team Telecom recommended denying a telecom application by China Mobile Ltd. based on national security and law-enforcement concerns for the first time. The FCC followed Team Telecom’s decision in May, rendering a unanimous vote to deny the telecom application.

The ongoing deliberations around the Pacific Light Cable Network, come about as U.S. officials have sought to bar China’s Huawei Technologies Co. from participating in developing 5G  mobile networks as well as similar undersea telecoms cables. In January, the Justice Department unsealed a 13-count indictment accusing Huawei of charges including conspiracy to defraud the U.S., money laundering and violating sanctions.

Dr. Peng had previously signed agreements with Huawei to share in the research and development of 5G mobile technology and cloud computing and Dr. Peng’s website  currently lists Huawei as a partner.