Beijing has ordered all government offices and public institutions to remove foreign computer equipment and software within three years, in a potential blow to the likes of HP, Dell and Microsoft.
The ban mirrors Donald Trump's clampdown on the use of Chinese technology, as a bitter trade feud between the two countries escalates.
When China replace Windows PCs the switchover to homegrown Chinese operating systems such as Kylin OS is not expected to be easy, but given the leverage using USA technology to run the Chinese government hands to the U.S. government, on this occasion the directive appears serious.
The move is likely a response to the crackdown campaign the USA initiated against Chinese tech companies this year, specifically against Huawei. On the same grounds, the White House pressured its allies in Europe and beyond to deny Huawei entrance to their 5G networks.
Analysts at China Securities, a broker, estimate that 20m-30m pieces of hardware will need to be swapped out as a result of the Chinese directive, with large scale replacement beginning next year. Orders from the ruling party were reportedly disseminated earlier this year and recently brought to light in a report by the Financial Times. Two employees from cyber security firms told the paper that government clients had described the policy.
Among several developments in the US-China trade war has been the latter's push to make itself technologically independent of the US semiconductor industry.
Paul Triolo of consultancy Eurasia Group noted that recent USA sanctions have added urgency to the hardware replacement project.
China internally refers to the policy as "3-5-2" which is indicative of the pace at which replacements will be carried out. "The goal is clear: getting to a space largely free of the type of threats that ZTE, Huawei, Megvii, and Sugon now face", he added, naming some of the Chinese companies that over the past two years have been blocked from buying from USA suppliers.
For now private Chinese companies, which form the bulk of Microsoft's Chinese revenue, are not affected, but this could easily change. Thus, by the end of 2022 all foreign hardware and software in government and public institutions should have been replaced by domestic alternatives. It was recently proposed by the United States that technology sales into the USA from "foreign adversaries" would be investigated for national security threats.
Replacing all the devices and software in this timeframe will be challenging, given that many products developed for U.S. operating systems like Windows for Microsoft.
Defining "domestically made" is also challenging. ARM, whose chips are used by Lenovo and Intel among many other hardware brands was not immediately contactable.