The Chinese communist party has reportedly ordered all government offices and public institutions to remove any foreign computer equipment and software over the course of the next three years. This includes products from U.S. companies like HP, Dell, and Microsoft.
The Financial Times reports that to boost the use of products from domestic technology vendors, Beijing has ordered all public institutions and government offices to remove any foreign-made computer equipment and software over the next three years. This move could have a negative effect on companies such as HP, Dell, and Microsoft which all produce software and hardware used throughout China.
The move is part of a larger effort to increase China’s reliance on domestic technologies and could add to worries of “decoupling” between U.S. business and Chinese supply chains. Washington banned U.S. firms from doing business with Chinese telecom firm Huawei earlier this year and is now investigating ways to supports its European rivals. It was recently proposed by the United States that technology sales into the U.S. from “foreign adversaries” would be investigated for national security threats.
The U.S. has also reportedly been pressuring European allies to freeze Huawei out of 5G infrastructure projects. It’s estimated by analysts at China Securities that between 20 and 30 million pieces of hardware will need to be swapped out due to the new Chinese directive, most of the large-scale replacement is expected to begin next year. The substitutions will take place at a pace of 30 percent in 2020, 50 percent in 2021, and 20 percent the year after, with the policy being nicknamed “3-5-2”.
Paul Triolo of consultancy Eurasia Group noted that recent U.S. sanctions have added urgency to the hardware replacement project. “China’s 3-5-2 programme is just the tip of the new spear,” said Triolo. “The goal is clear: getting to a space largely free of the type of threats that ZTE, Huawei, Megvii, and Sugon now face.”
Read more at the Financial Times here.