The new policy introduced by the Chinese government has been compared to the Trump administration’s attempts to reduce the use of Chinese technology in the US.
On Monday (9 December), the Financial Times (FT) reported that Beijing has ordered all state offices and public institutions to remove all foreign computer equipment and software within three years. The policy is expected to significantly impact tech giants HP, Dell and Microsoft.
FT compared the decision to the Trump administration’s attempts to reduce the use of Chinese technology in the US. The most well-known example in this case is the Huawei ban, which was announced after the US government classified the Chinese company as a national security threat.
This is the first “publicly known” instruction given to Chinese buyers to switch to its native technology vendors. It is part of a broader campaign to “increase China’s reliance on home-made technologies”, with analysts expecting that 20m to 30m pieces of foreign equipment will need to be replaced in China.
It is estimated that US technology companies make $150bn in revenues from China. As a significant portion of that comes from the private sector, the companies will still maintain a decent share of the market.
In 2017, Microsoft partnered with its Chinese joint venture to create a Chinese Government Edition of Windows 10. According to Chinese cybersecurity firms, government clients will now have to migrate to entirely Chinese-made operating systems.
The policy has been dubbed “3-5-2”, with China planning the pace of replacement at 30pc in 2020, 50pc in 2021 and 20pc in 2022, according to a note from brokerage firm China Securities. China Securities noted that the directive came from the Chinese Communist Party’s Central Office earlier this year.
Paul Triolo, a consultant for Eurasia Group, told FT: “China’s 3-5-2 programme is just the tip of the new spear. The goal is clear: getting to a space largely free of the type of threats that ZTE, Huawei, Megvii and Sugon now face.”
In the coverage of the government’s order, it has been noted that it may be difficult for China to define “domestically made” technology products. For instance, Chinese-made Lenovo computers feature components made by international companies, with processor chips made by Intel and hard drives built by Samsung.
According to Bloomberg, more than 100 trial projects for domestic products were completed in July.