The intensifying technological competition between the United States and China has expanded into a strategic contest over undersea fibre optic cables, which carry nearly 99% of intercontinental data traffic and are crucial to powering the global artificial intelligence (AI) sector.
This development comes amid growing demand for large-scale cross-border data flows necessary to train and operate advanced AI systems. Last week, Beijing criticized Washington’s plan to invest US$175.8 million in upgrading aging subsea cable lines in the Caribbean and Central America, accusing the United States of politicizing global undersea cable networks to exclude Chinese involvement.
China’s Foreign Ministry warned that such actions risk disrupting international market norms, threatening global data connectivity and cybersecurity, and ultimately serving no one's interests. Ministry spokesperson Lin Jian emphasized China’s support for multilateral cooperation in submarine cable projects, highlighting principles of fairness, justice, equality, and inclusivity.
The U.S. move reflects a broader strategy to enhance national security by tightening control over transoceanic data infrastructure. The Federal Communications Commission (FCC) recently adopted new regulations requiring licenses for operators of submarine line terminal equipment, effectively barring Chinese companies from providing equipment or services related to cable networks connected to the United States. These rules build on a prior FCC ban on Chinese telecommunications firms such as Huawei and China Mobile, which were excluded from U.S.-linked subsea cable projects due to security concerns.
In announcing the new restrictions in late June, the FCC described undersea cables as the critical "backbone" of the global internet. The agency emphasized that enhanced oversight is necessary to safeguard expanding capacity requirements driven by AI computing demands.
Experts say the dispute marks a shift in the U.S.-China technology rivalry from competition over specific products to battles for control over the foundational infrastructure underpinning digital technologies. Xu Tianchen, senior economist at the Economist Intelligence Unit, noted that the acceleration of AI development has elevated the strategic value of subsea cables, making reliable and high-capacity connectivity indispensable. According to Xu, this contest over physical and digital infrastructure reflects a broader challenge related to digital sovereignty, resilience, and trusted networks.
The tension accompanies other recent developments in the AI and technology sectors. Despite sustained U.S. export restrictions on advanced chips, China has narrowed the technological gap more quickly than anticipated. Meanwhile, Washington has intensified measures against Chinese AI firms and open-source AI models, prompting accusations from Beijing of attempts to impose "AI hegemony" and warnings of potential retaliatory actions. The U.S. last week also announced import bans on certain Chinese robots and power inverters, citing national security and supply chain risks.
While the United States applies regulatory pressure to limit China’s role in subsea cable projects, China continues to advance regional infrastructure initiatives to strengthen its digital connectivity and influence.
The ongoing tug-of-war over undersea cables underscores how critical infrastructure has become a new front in the broader geopolitical and technological rivalry shaping the future of AI and global data networks.