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China bans foreign PCs and Windows to government agencies and state-owned companies

The Chinese government has ordered a massive campaign to swap foreign-made PCs from government and state-owned companies for domestic products within two years. After the May holidays, employees were asked to replace computers from US brands such as Hewlett Packard (HP) and Dell with local alternatives, Bloomberg news agency reports, citing anonymous insiders.

Future computers should therefore only work with internally developed operating systems. This would particularly affect Microsoft. A few years ago, the Redmond-based company made a special edition of Windows 10 that is said to be tailored to the needs of the Chinese government. Additionally, the Ubuntu Linux distribution Kylin, aka Neokylin, has been around since 2014 and is optimized for the requirements of the Middle Kingdom.

According to Bloomberg, at least 50 million PCs are likely to be replaced at the public sector level alone as a result of the action ordered by the central government. It is the “most aggressive effort” to remove a key foreign technology from China’s most sensitive areas. The decision is rooted in the campaign that Beijing has been pursuing for several years to generally replace imported technology with domestic products.

With this, the government wants to reduce dependence on geopolitical rivals like the United States for everything from semiconductors to servers and phones and become technologically sovereign. The “China Standards 2035” plan also provides that the People’s Republic will set global standards for emerging technologies such as AI, 5G and the Internet of Things.

Shares of HP and Dell were down around 2.5% in New York on Friday morning. In contrast, local Chinese champion Lenovo, which acquired IBM’s IT division in 2005, was up 5% on the Hong Kong stock exchange. Chinese server manufacturers Inspur Electronic Information and Dawning Information also benefited from the announcement, as did computer program vendors Kingsoft, Inspur Software, China National Software & Service, and Shanghai-based China Standard Software Company specializing in Linux.

According to the report, the project reflects Beijing’s growing concerns about information security and growing confidence in home hardware – the world’s largest laptop and server manufacturers now include Lenovo, Huawei, and Inspur. However, their products are still based on US components such as semiconductors from Intel or AMD. The new guideline is said to initially only cover PCs, laptops, servers, and software and exclude hard-to-replace components, such as microprocessors and chips.

US IT giants like HP and Microsoft have already started joint ventures with Chinese government-backed companies. They want to continue securing orders from state-owned companies. With this strategy, they should get through the current campaign more difficult.

The campaign will then be extended to the provincial administrations, where they will also be based on a two-year plan. Some agencies, such as state media and cybersecurity agencies, may initially continue to purchase foreign equipment with special permits, a source told the news agency. However, this line is likely to be strengthened in the future.

The US government, in turn, has been applying sanctions against foreign companies targeting China for years. Former US President Donald Trump banned telecom deals with companies in “opposite” countries in 2019, which should hit Huawei in particular. The U.S. Department of Commerce said in 2020 that the country’s chip makers would no longer be allowed to supply semiconductors to the world’s second-largest smartphone maker in China if they were based on U.S. software, technology and know-how. These are just two episodes of a broader trade war between the US and China.


(tiw)

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