China is pushing for more control over undersea cable projects in the South China Sea and held back approval for a project that involved Facebook parent Meta Platforms Inc (NASDAQ:META) for several months.
What Happened: The cable dubbed SJC2 which will connect Japan with Singapore but also Taiwan and Hong Kong was delayed for more than a year due to Chinese objections and permit issues, reported Financial Times.
The consortium building SJC2 includes Mark Zuckerberg-led Meta along with China Mobile and Taiwan’s Chunghwa Telecom.
The approval was reportedly held back for months in territorial waters surrounding Hong Kong with authorities bringing up concerns that the contractor might indulge in spying or install equipment in the waters, a person familiar with the matter told FT.
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Why It Matters: China’s enforcement actions, in the waters it claims, through the so-called “nine-dash line,” comes in the wake of Beijing being excluded from international projects and over Chinese fears of cables being a front for espionage, noted FT.
Permission for laying cables is generally not required in waters between 12 nautical miles and 200 nautical miles from land — an area that is known as a country’s “exclusive economic zone.”
China has reportedly made the process of obtaining permits within the 12-mile area onerous and has started requesting permits for laying cables in its claimed territorial waters beyond 12 miles.
In response, subsea cable consortiums are seeking new routes that avoid China’s claimed waters, reported FT citing the examples of “Apricot” and “Echo” projects that avoid the South China Sea by going around Indonesia.
Price Action: On Tuesday, Meta shares closed 7.25% higher at $194.02 in the regular session and fell 0.2% in after-hours trading, according to Benzinga Pro data.
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