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China reportedly escalates trade war with ban on foreign computer kit

All Chinese public bodies need to replace all foreign computer hardware and software within three years according to a report.

The scoop comes from the FT, which says it’s a publicly-known instruction, direct from the Communist party – i.e President Xi Jinping. No clear reason seems to have been given for the directive, but it’s clearly part of a drive to make China as self-reliant as possible so it can’t be held to ransom by the US.

The biggest losers from this move stand to be Dell, HP, Apple and Microsoft, while they must be breaking out the bubbly at Lenovo. To what extent non-US companies might get a pass is unclear and presumably Taiwanese ones get a pass since China likes to insist it owns the place. Assuming that’s the case China is pretty well served by companies such as Acer, Asus, etc.

This particular move doesn’t seem to directly affect the telecoms industry, but the precedent it sets is ominous. By banning Chinese companies from its telecoms sector the US has made it clear it’s prepared to use business as a political weapon. This directive has apparently been in place for a few months and IT has presumably been chosen because that’s the industry China is best placed to be self-reliant in.

But while its easy to imagine the entire Chinese public sector using only Lenovo PCs in three years’ time, what software they will run on them is less clear. Microsoft obviously dominates globally when it comes to operating systems and productivity software, so a switch to home-grown equivalents feels like a massive undertaking.

That’s the real statement being made with this move, that the Chinese state is willing to do whatever it takes to be as independent as possible from the US when it comes to trade. It’s easy to imagine China extending this band to its private sector and, whenever it considers such a thing possible, to extend the ban to other industries such as telecoms. This geopolitical tussle between China and the US looks set to escalate a lot more before one of them blinks.

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