US technology companies may be affected by a recent move taken by the Chinese government. Namely, reports indicate that Beijing has officially ordered all public institutions to stop using software and tech devices manufactured by foreign companies, such as Microsoft, HP, or Dell.
The reason behind this directive is to further encourage the Chinese economy to make the switch towards local technology companies. At the same time, this move is quite similar to the recent mandate issued by the Trump Administration, where US-based institutions, alongside US allies, were asked to refrain from using technological equipment manufactured in mainland China, or by Chinese companies.
According to the Trump Administration, this move was necessary due to several controversies, stating that IT equipment manufactured in China could be used for espionage purposes. Similarly, the US-led effort also included asking allies from Europe to avoid using Huawei to conduct 5G telecommunication infrastructure projects.
According to some economists, this move is also meant to increase the sustainability and resilience of tech goods manufactured in China. Likewise, the move is necessary seeing how the supply chain between the US and the Asian country is currently unavailable due to the trade war.
An estimate indicates that 20–30 million hardware devices will have to be swapped. Reports indicate that the large-scale replacement effort will begin early next year. According to the Chinese government, public institutions will change 30% of their devices in 2020, followed by 50% in 2021 and 20% afterward. The same principle applies to foreign software as well.
Currently, this policy only affects the hardware used by public institutions and state offices throughout the country. Therefore, there is no ban on the purchase of foreign tech devices, as these are still readily available for purchase in all IT-related stores. According to analysts, a theoretical ban on the purchase of commercial IT devices would have severe consequences on the internal economy of both the US and China.