Dragoman Digest

US telecoms regulator moves to ban Chinese undersea cable technology 

China’s growing market share in undersea cable technology stokes fear over espionage risk

The US is poised to implement a sweeping ban that would prevent companies using Chinese technology. On August 7, the Federal Communications Commission (FCC) is set to vote on a proposed rule that would bar any company using restricted Chinese equipment or technologies from obtaining new licenses or leasing cable capacity. Chinese companies active in the sector include China Telecom, China Mobile, China Unicom, and Huawai. The regulation will apply only to future submarine cable projects, not existing infrastructure. Submarine cables carry 99 percent of internet traffic and 95 percent of global communications, including sensitive data and financial transfers. The US sees this rule as a way of hardening its critical systems from mounting cyber threats, including the ongoing Chinese-backed “Salt Typhoon” campaign targeting US systems.

This proposed ban comes amid intensifying competition in the strategically vital undersea cable industry. Historically dominated by Western and Japanese players, the sector is undergoing a structural power shift. As of 2023, French, American and Japanese cable companies still collectively controlled the majority of the cable market, supplying 78 percent of global infrastructure. Yet China, which currently has 10 percent market share, is aiming to double its market share to 20 percent by 2030. Over the past two decades, Chinese firms have built or repaired a quarter of the world’s cables. Washington is worried that Beijing will compel domestic companies to share network data under various legal instruments including the 2017 National Intelligence Law.

There are also other major industry changes taking place, Big Tech firms like Google, Meta, Microsoft, and Amazon are purchasing over two-thirds of cable capacity. This has shifted control from traditional telecoms companies towards US digital behemoths. Many in Washington will likely view this shift as a lever to limit Chinese participation, including at the infrastructure level.

Tentative India-China rapprochement papers over economic grievances

New Delhi grapples with optimum role for Chinese capital and inputs in industrialisation drive

India’s foreign minister Subrahmanyam Jaishankar held his first meeting in Beijing since the 2020 Galwan border clashes, where fighting caused the deaths of 20 Indian soldiers and an undisclosed number of Chinese casualties. Meetings between Jaishankar and President Xi Jinping add to broader momentum in the bilateral relationship after Prime Minister Modi and Xi met in October last year. However, fundamental issues between the two sides persist, particularly economic imbalances that have only deepened. India’s trade deficit with China grew to US$100 billion in 2024-25, with dependencies ranging from raw materials to manufacturing equipment across key industries. Chinese companies supplied 30 percent of India’s major industrial products in 2023, rising to 39 percent for electronics and telecommunications.

China has little desire to see India emerge as an alternative manufacturing hub. China’s April 2025 restrictions on rare earth minerals and magnets – though targeting the US – temporarily limited exports to India. This left Indian automakers dependent on rapidly depleting three-to-six-week stockpiles. Beijing has simultaneously restricted critical machinery exports and the ability of engineers to leave the country, as part of an effort to stymie Apple’s ability to build out manufacturing in India.

Chinese economic engagement in India presents a mixed picture for the country’s industrialisation ambitions. Major Chinese companies including Envision, Xiaomi, and Oppo all have large manufacturing facilities in India. New Delhi has nonetheless at times implemented security-based constraints on Chinese investment. Chinese EV maker BYD’s US$1 billion manufacturing proposal remains blocked under rules imposed after the 2020 border clashes, which have delayed deals worth billions. There are influential voices calling for India to strike a more nuanced balance between security and economic imperatives. India’s government think tank NITI Aayog has now proposed allowing Chinese firms to take up to 24 percent stakes without security clearances. Advanced and cost competitive Chinese equipment has also helped India’s infrastructure development. For example, Adani Group and others have ignored US warnings and installed over 250 cranes sourced from state-run Chinese manufacturer ZPMC at Indian ports. Despite diplomatic warming, India’s industrialisation drive continues to deepen its dependence on Chinese technology and capital.

Resource nationalism proliferates across Africa’s critical minerals’ sector

Africa’s push for greater local “value-add” will influence the US-China minerals rivalry

A wave of resource nationalism is reshaping Africa’s mining landscape, as governments increasingly restrict raw mineral exports to build domestic processing capacity and capture more economic value. Nearly half of Africa’s 54 countries have introduced such measures over the past two years, reflecting a strategic pivot away from the historic model of exporting unprocessed minerals. Zimbabwe, the continent’s leading lithium producer, will ban exports of unprocessed lithium by 2027 and has already pressured mining firms to establish local processing plants. Zimbabwe claims that this has led to a more than eightfold increase in export earnings in just one year. Gabon, which holds a quarter of global manganese reserves, plans a similar ban by 2029. Across the continent, nations including Guinea, Uganda, and Namibia have placed export bans on unprocessed exports. Others including Ghana and Zambia are expanding refining infrastructure. Leaders such as Mali’s Interim President Assimi Goïta have framed these policies as necessary to breaking Africa’s historic dependence on foreign-controlled commodity supply chains and to capture more benefits from the continents vast mineral endowment.

This assertive turn toward domestic mineral processing is also influencing geopolitical competition, particularly between China and the US. China is already well entrenched on the continent. State-owned firms are pouring hundreds of millions into processing facilities in Zimbabwe and Ghana. Meanwhile, President Trump has expressed interest in securing African critical mineral deals to ease reliance on Chinese-controlled supply chains. The Democratic Republic of the Congo (DRC) has been the focal point of these efforts to data.  This week, KoBold Metals – backed by billionaires Jeff Bezos and Bill Gates – announced a deal with Congo’s government to develop one of the world’s largest hard-rock lithium deposits. However, the rise in resource nationalism and attendant rise in sovereign risk may complicate US ambitions. State-owned or backed Chinese firms, with much lower hurdle rates and long-term investment horizons, may be better suited to navigating these operating conditions. Chinese companies have notably dominated the downstream processing of nickel in Indonesia after export bans were imposed in 2020.

Japan injects billions in hope of sparking shipbuilding revival

China and South Korea have progressively eroded Japan’s once dominant market share

Japan in recent weeks has announced a ¥1 trillion (US$7 billion) public-private fund aimed at modernising domestic shipyards and constructing “national shipyards” that will be leased to private enterprises. This initiative also aims to help the consolidation of Japan’s still relatively fragmented industry. An early victory in this regard was Imabari Shipbuilding's recent 60 percent acquisition of Japan Marine United. The combined entity will be the fourth largest shipbuilder globally. The ultimate objective is to ensure the survival of Japan’s shipbuilding industry, which before 2002 was the world’s largest. Japan’s global share of ship deliveries has declined to just 12 percent in 2024, down from 25 percent in 2018. With US policymakers viewing a robust Japanese shipbuilding sector as a counterweight to China, Tokyo has proposed establishing a fund to jointly revitalise shipbuilding in trade negotiations with Washington. Japan is also hoping to benefit from recent US policy shifts, including a proposed system of tariffs and fees on Chinese-built ships.

China’s ascendancy in shipbuilding has benefited from strong state support and direction. In 2002, China set a target of becoming the world’s largest shipbuilding nation. This goal was realised just 15 years late in 2017 when China displaced South Korea as the global leader.  Between 2006 and 2013 alone, Beijing injected more than US$91 billion into shipyards, spurring the emergence of major shipbuilding SOEs like China State Shipbuilding Corporation. Of the 64.4 million gross tons of ships produced in 2024, China accounted for 54 percent of them, more than the combined output of South Korea’s 27 percent and Japan’s 13 percent. South Korea has also benefited from state largesse, while fiscally constrained Japan has adopted a more market-driven approach despite other disadvantages, including relatively high labour costs and an ageing workforce. Japan will be hoping that a combination of state support, consolidation and a tailwind from US policy interventions will help catalyse a shipbuilding renaissance.

Trump’s pharmaceutical tariff threat triggers surge of defensive investment pledges

Truncated deadlines compel companies to announce billions before tariff policies exist

On July 15, US President Donald Trump dramatically accelerated the deadline for settling pharmaceutical tariffs to “end of the month”, abandoning his 18-month window (set the previous week) for imposing 200 percent levies on foreign medicines. Several countries have significant US market exposure. Australia’s pharmaceuticals represent its second-largest US export after beef at AU$2.2 billion annually. India sends 32.76 percent of its US$21.7 billion pharmaceutical exports to America, the highest proportion among major suppliers. With no policy framework existing, Trump offered only promises to “start off with a low tariff” before making it “very high”. The mercurial compression of timelines for pharma tariffs follows Trump’s sudden 50 percent copper tariff announcement that sparked commodity price surges.

Some of the companies with the most exposure to tariffs are major employers in the US. UK-based AstraZeneca operates 19 US sites with 18,000 employees, generating 42 percent of its revenue in the US. Indian drugmakers derive large North American revenue shares – Dr. Reddy’s 44.6 percent, Lupin 38 percent, Sun Pharmaceutical 31 percent – from US manufacturing facilities. Commerce Secretary Howard Lutnick calls foreign pharmaceutical supply a “structural weakness” that tariffs aim to end, though even major investments in domestic manufacturing may not avoid reliance on foreign supply chains. AstraZeneca’s planned Virginia facility, for instance, will produce drug ingredients rather than finished medicines, leaving parts of the supply chain still dependent on foreign sources.

Corporate responses to the tariff threat have followed a predictable pattern. AstraZeneca recently pledged US$50 billion in US investments through 2030. This mirrored a similar US$50 billion commitment Switzerland’s Roche made in April. Other companies have been more circumspect. Lupin CEO Vinita Gupta has said that her company will await formal tariff levels and “economic incentives that the government puts in place” before making expansion decisions. Pharma tariffs exemplify Trump’s broader trade strategy of using accelerated timelines and extreme threats to extract immediate concessions. Companies with decades in the US are now scrambling to announce investments that may simply rebrand existing expansion plans, while actual manufacturing decisions await concrete policies.