China reportedly orders state offices to remove foreign tech

Satya Nadella

In context: In its ongoing trade war with the US, China's Communist Party has issued a directive seeking the mass replacement of all foreign computer equipment in government offices and public institutions within three years, in an attempt to increase its reliance on domestic technology amid the current US sanctions.

The government under President Xi Jinping has been trying for years to replace technologies from overseas, and particularly from the United States.

The Trump administration banned USA companies from doing business with Chinese telecommunications company Huawei earlier this year and in May, Google, Intel and Qualcomm announced they would freeze cooperation with Huawei. Two employees from cyber security firms told the paper that government clients had described the policy.

Beijing's latest salvo is happening against the backdrop of a broader trade war between the United States and China, in which technology has emerged as a major point of contention, with the Trump administration seeking to curb Beijing's practice of forcing USA firms to transfer their technologies to Chinese firms. Unlike previous pushes for self-sufficiency, recent U.S. sanctions have added urgency to the project, said analyst Paul Triolo of consultancy Eurasia Group.

Last month, the US Federal Communications Commission (FCC) voted unanimously to designate Huawei and ZTE - another Chinese telecom firm - as national security risks. Thus, by the end of 2022 all foreign hardware and software in government and public institutions should have been replaced by domestic alternatives.

Replacing all the devices and software in this timeframe will be challenging, given that many products developed for U.S. operating systems like Windows for Microsoft. However, that could also change in the long term, especially if China finds new methods to encourage Chinese enterprises to invest in local tech too. Microsoft recently received a license to export "mass-market" software to Huawei, a Chinese company, but that was before the news broke of this new direction from the Chinese government. Chinese government offices tend to use desktop computers from the Chinese-owned company Lenovo, but components of the computers, including its processor chips and hard drives are made by American companies. When it comes to private companies, "let's see what the government orders are - they will not proactively want to substitute, since the investment is high", the analyst added.



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