Government offices and public institutions in China have been ordered to replace foreign computers and software within three years, Financial Times reported on Monday (Dec. 9).
As per the government directive, Chinese buyers must replace all existing foreign computer equipment within the next three years, a first such public instruction in the country.
The Financial Times' explosive piece adds that analysts over at China Securities estimate Beijing's orders will see 20-30 million devices needing to be replaced.
The Trump administration banned U.S. companies from doing business with Chinese telecommunications company Huawei earlier this year and in May, Google, Intel and Qualcomm announced they would freeze cooperation with Huawei.
The US has also blacklisted other Chinese technology firms implicated in human rights abuses of Muslim minorities in China's Xinjiang region.
The directive is internally known as "3-5-2" based on the percentage targets the Chinese Communist Party imposed on government organizations. Analysts told the FT that 30% of substitutions would take place in 2020, 50% in 2021 and 20% in 2022.
Given its impact on U.S. companies that have ongoing businesses with the Chinese government, such as Dell, HP, and Microsoft, the directive was meant to be implemented in secrecy, until details around its existence leaked to the Financial Times. Most software developers make products compatible with USA -made operating systems, for example Apple's macOS and Microsoft's Windows, Financial Times suggested.
Beijing's latest salvo is happening against the backdrop of a broader trade war between the United States and China, in which technology has emerged as a major point of contention, with the Trump administration seeking to curb Beijing's practice of forcing U.S. firms to transfer their technologies to Chinese firms.
Defining "domestically made" is also challenging. Despite the fact that government offices like to use desktop computers from the Chinese-owned company Lenovo, its processor chips and hard drives are mostly manufactured by American or South Korean companies.
For now, this directive does not apply to privately-owned Chinese companies.