Beijing pushes banks to ditch IBM servers over spying dispute with US
Lenders urged to use Chinese technology as dispute with US over spying claims heats up
The central government is pushing domestic banks to remove high-end servers made by International Business Machines and replace them with a local brand, sources said, in an escalation of a dispute with the US over spying claims.
The review fits a broader pattern of retaliation after American prosecutors indicted five Chinese military officers for allegedly hacking into the computers of US companies and stealing secrets. The central government said last week it would vet technology companies operating in China, while the reported on Monday that Beijing had ordered state-owned companies to cut ties with US consulting firms.
The results of the government review would be submitted to a working group on internet security chaired by President Xi Jinping, two sources said.
The move would be a further blow to IBM's business in China, where sales fell 20 per cent in the first quarter of the year. IBM chief financial officer Martin Schroeter said in a conference call last month the challenges were cyclical "and we still see good opportunity over the long term" in China.
IBM announced in January it would sell its low-end server business to Beijing-based Lenovo for US$2.3 billion. That transaction faces regulatory scrutiny, including a US national security review.
The sources said the central government was concerned that IBM might be a security threat following Edward Snowden's revelations of a US National Security Agency spying programme, and also believed IBM servers were more expensive in China than in other regions.
China Postal Savings Bank is using servers made by Jinan-based Inspur as part of a trial programme that began in March last year, the sources said, adding that the central government planned to expand that trial to other banks.
Other agencies involved in the review included the National Development and Reform Commission, the China Banking Regulatory Commission, and the Ministry of Industry and Information Technology, the sources said.
The US indictment, announced on May 19, led Beijing to suspend its involvement in a cyber-security working group and drew formal protests from the ministries of defence and foreign affairs. The State Internet Information Office likened the US actions to "a thief yelling: 'Catch the thief'".
