Sign up for our daily briefing

Make your busy days simpler with Axios AM/PM. Catch up on what's new and why it matters in just 5 minutes.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Catch up on coronavirus stories and special reports, curated by Mike Allen everyday

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Denver news in your inbox

Catch up on the most important stories affecting your hometown with Axios Denver

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Des Moines news in your inbox

Catch up on the most important stories affecting your hometown with Axios Des Moines

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Minneapolis-St. Paul news in your inbox

Catch up on the most important stories affecting your hometown with Axios Twin Cities

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Tampa Bay news in your inbox

Catch up on the most important stories affecting your hometown with Axios Tampa Bay

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Charlotte news in your inbox

Catch up on the most important stories affecting your hometown with Axios Charlotte

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!

Hengtong Group Chairman Cui Genliang. Photo: VCG/VCG via Getty Images

Huawei is set to sell its underseas cable business, a move that could help China continue a critical part of its global infrastructure push.

Why it matters: Two weeks ago, the U.S. Commerce Department added Huawei to its “entities list,” blocking it from U.S. suppliers. The sale of Huawei’s underseas cable business would effectively pass the baton to another Chinese national champion, Hengtong Group.

Context: Submarine cables carry the vast majority of international data, from cloud computing to text messaging, and will only become more critical with the arrival of 5G.

  • China aims to capture 60% of the world’s fiber-optic communications market, and it is not getting out of the underseas cable business, which is far too important, commercially and strategically.

Between the lines: Huawei’s move puts the spotlight on Hengtong Optic-Electric, a subsidiary of Hengtong Group whose ties with the Chinese military could draw just as much scrutiny.

  • Like Huawei, Hengtong's founder served in the People’s Liberation Army.
  • The PLA also gave the company an innovation award in 2015 and formed an academic partnership to research underseas cables the following year.
  • The Chinese government has praised Hengtong as a model of “civil-military integration” for developing military-grade cable technology, underscoring the dual-use history of its technologies.

The impact: The sale would barely put a dent in Huawei’s portfolio. Last year, its underseas cable business generated $17 million in net profit, according to Huawei’s annual report — a drop in the bucket of its $8.6 billion in net profit.

What to watch: U.S. officials have been concerned that Huawei’s growing involvement in underseas cables could allow China to monitor or disrupt data traffic, per a Wall Street Journal report in March. Rather than limiting the fallout, Huawei’s sale might simply spread the damage by putting Hengtong in U.S. crosshairs.

Jonathan Hillman is director of the Reconnecting Asia Project at the Center for Strategic and International Studies.

Go deeper

10 mins ago - Politics & Policy

Kevin McCarthy's rude awakening

House Minority Leader Kevin McCarthy. Photo: Mark Wilson/Getty Images

Kevin McCarthy is learning you can get torched when you try to make everyone happy, especially after an insurrection.

Why it matters: The House Republican leader had been hoping to use this year to build toward taking the majority in 2022, but his efforts to bridge intra-party divisiveness over the Capitol siege have him taking heat from every direction, eroding his stature both with the public and within his party.

The next big political war: redistricting

Illustration: Aïda Amer/Axios

Democrats are preparing a mix of tech and legal strategies to combat expected gerrymandering by Republicans, who are planning to go on legal offense themselves.

Why it matters: Democrats failed to regain a single state legislature on Election Day, while Republicans upped their control to 30 states' Houses and Senates. In the majority of states, legislatures draw new congressional district lines, which can boost a party's candidates for the next decade.

40 mins ago - Politics & Policy

Vaccinations, relief timing dominate Sweet 16 call

Sen. Joe Manchin (D-W.V.) speaks during a news conference in December with a group of bipartisan lawmakers. Photo: Caroline Brehman/CQ-Roll Call, Inc via Getty Images

Vaccine distribution, pandemic data and a cross-party comity dominated today's virtual meeting between White House officials and a bipartisan group of 16 senators, Senator Angus King told Axios.

Why it matters: Given Democrats' razor-thin majority in both chambers of Congress, President Biden will have to rely heavily on this group of centrist lawmakers — dubbed the "Sweet 16" — to pass any substantial legislation.

You’ve caught up. Now what?

Sign up for Mike Allen’s daily Axios AM and PM newsletters to get smarter, faster on the news that matters.

Please enter a valid email.

Please enter a valid email.

Subscription failed
Thank you for subscribing!