China's Communist Party has ordered all government offices and public institutions to remove foreign computer equipment and software within the next three years, the Financial Times reported on Sunday.
The move will likely hurt foreign tech companies, such as HP, Dell and Microsoft, as 20 to 30 million devices are expected to be swapped with alternatives from Chinese competitors. The trade war only accelerated this trend, with the USA government banning Huawei and other Chinese companies from selling technology to us federal agencies. Washington has also been pressuring U.S. allies to shun Huawei in the buildout of next-generation, 5G mobile telecommunications networks. Two employees from cyber security firms told the paper that government clients had described the policy.
"Cutting off technical services to Huawei will be a real turning point in China's overall research and development and use of domestic chips", he said in a social media post. As per their estimates, the Chinese directive necessitates replacement of 20 mn to 30 mn pieces of hardware beginning next year.
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But unlike previous pushes for self-sufficiency in technology, recent U.S. sanctions have added urgency to the project, said Paul Triolo of consultancy Eurasia Group. "China's 3-5-2 programme is just the tip of the new spear", said Triolo.
Targets Chinese buyers to switch to domestic technology vendors.
However, for the most part, these companies sell to private Chinese companies, so they shouldn't see too drastic of a revenue drop. Government offices already tend to use Lenovo's desktop computers, following the company's acquisition of USA giant IBM's personal computer division.
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According to these sources, the order came from the Chinese Communist Party's Central Office earlier this year and was created to switch government agencies and critical infrastructure to "secure and controllable" technology, in line with regulations first laid out in 2017 by Chinese Cyber Security Law.
Replacing all the devices and software in this timeframe will be challenging, given that many products developed for United States operating systems like Windows for Microsoft.
It could also prove a challenge to determine whether a product is made in China.
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