China ordered all state agencies and corporations to remove foreign computers and software

The Chinese government has ordered public offices as well as state-owned corporations to replace all foreign-brand computers with domestic brands within the next two years. It is the strongest move yet by the Chinese government to remove foreign technology from sensitive Chinese institutions.

Bloomberg’s source said that after the last holiday, government employees using foreign computers will be required to switch to domestic brands running on domestically-developed operating systems. When implemented, the plan will lead to the replacement of about 50 million computers in central government agencies alone.

The decision takes China’s decades-long campaign of import substitution one step further. It also directly affects sales of computer and software manufacturers in China, including HP, Dell Technologies and China’s largest computer brand today, Lenovo.

In Friday morning trading, Lenovo shares jumped 5%, while software developer Kingsoft also gained 3.3%. In addition, Inspur Electronics Information Industry, a Chinese server manufacturer, also increased by 6% while its colleague Dawning Information increased by 4%.

Attempts to replace foreign brands not only reflect China’s concerns about information security, but also its confidence in domestic hardware and software: China has Lenovo, Huawei and Inspur, the world’s largest laptop and server manufacturers, in addition to domestic software developers such as Kingsoft and Standard Software are trying to catch up with Microsoft and Adobe.

Although this replacement process has been in the works for decades, a mismatch with Chinese-developed software and hardware has hampered this effort. This has changed in recent years with the rise of Chinese hardware and software makers, although still dependent on US processors such as Intel and AMD.

For now, China’s decision is still limited to computer and software brands, but not to hard-to-replace components such as chips from Intel and AMD. Currently, China is encouraging the use of Linux-based operating systems to replace Microsoft’s Windows. Shanghai-based Standard Software is one of the leading suppliers of such tools.

Refer to Bloomberg