China pushes for local technology
China is aiming to purge most foreign technology from banks, the military, state-owned enterprises and key state agencies by 2020, stepping up efforts to shift to domestic suppliers, according to people familiar with the effort.
China is aiming to purge most foreign technology from banks, the military, state-owned enterprises and key state agencies by 2020, stepping up efforts to shift to domestic suppliers, according to people familiar with the effort.
The push comes after a test of domestic alternatives in Siping that was deemed a success, said the people. Workers there replaced Microsoft Corp's Windows with a home-grown operating system called NeoKylin and swapped foreign servers for ones made by China's Inspur Group.
The plan for changes in four segments of the economy was driven by national security concerns and marked an increasingly determined move away from foreign suppliers under President Xi Jinping, they said.
The campaign could have lasting consequences for US companies including Cisco Systems, IBM, Intel Corp and Hewlett-Packard.
"The shift is real," said Charlie Dai, an analyst at Forrester Research. "We have seen emerging cases of replacing foreign products at all layers from application, middleware down to the infrastructure software and hardware."
In February, Xi called for faster development of the industry at the first meeting of his internet security panel.
Foreign suppliers might be able to avoid replacement if they shared their core technology or gave China's security inspectors access to their products, the sources said. The technology might then be seen as safe and controllable.
China ranks second behind the US in technology spending, with outlays rising 8.1 per cent to US$182 billion last year, according to research firm IDC. The US spent US$656 billion, a 4.2 per cent increase over 2012.
The push to develop domestic suppliers comes as regulators have pursued antitrust probes against Western companies, including Microsoft and Qualcomm. Recent months have seen Microsoft's China offices raided, Windows 8 banned from government computers and Apple iPads excluded from procurement lists.
"I see a trade war happening. This could get ugly fast, and it has," said Ray Mota, the chief executive of US-based ACG Research, who expects the issue to result in direct talks between the US and China.
Chinese banks and finance agencies have been ordered to ensure that at least 75 per cent of their computer systems used safe technology by 2019.
