China Speeds Up Replacement of Western PCs and Other Tech
China is speeding up its efforts to lessen reliance on foreign technologies, focusing on nurturing and implementing domestic alternatives, according to Reuters. This strategic shift has been influenced by the tightening restrictions from U.S. government on high-tech exports to China. The initiative has seen a surge in government, military, and state-linked entities pushing for an accelerated adoption of domestic PCs, telecommunication equipment, and software.
Hundreds of Billions in the Game
In 2022, China allocated ¥1.4 trillion (equivalent to $191 billion) towards the substitution of foreign hardware and software with domestic alternatives, representing a 16.2% increase compared to the previous year, as per insights from the IT research entity, First New Voice.
The number of payments and bids aimed at nationalizing equipment used by state-owned enterprises (SOEs) has seen a two-fold increase, rising from 119 to 235 from September 2022 to September 2023, Reuters found out from finance ministry database. The value of projects awarded during this period has also tripled, reaching a total of ¥156.9 million ($21.448 million). Although only capturing a fraction of the national tender bids, the database stands as the most extensive public repository of state tenders, furthermore, it corroborates with information from independent third-party sources (e.g., research documents), the news agency notes.
Replacing Hardware and Software
A significant portion of China’s shift initiative is directed towards computer hardware, aiming to supplant foreign-branded machines and components with locally developed and manufactured ones. The telecommunications industry is also under scrutiny, with plans underway to transition towards domestic technologies, minimizing the reliance on Western companies. Additionally, there is an effort to revamp sensitive infrastructural systems, such as usage of domestic intelligence-gathering equipment.
China is strategizing to overhaul various software sectors with homegrown solutions too. Office software systems used by state enterprises are earmarked for replacement with local versions, aligning with directives to enhance domestic utilization. Financial technologies, particularly those governing digital transactions and banking databases, are also slated for a revamp, fostering a transition towards domestic software to bolster security and autonomy.
Huawei has emerged as a main player in China’s technological transformation, witnessing a substantial growth in its enterprise business sector, which encompasses software and cloud computing services. In 2022, Huawei’s enterprise business reported sales amounting to ¥133 billion ($18.181 billion), marking a 30% increase from the previous year. The company’s comprehensive range of products and its agility in product deployment are the key factors contributing to its thrive in China despite being sanctioned by the U.S. government.
China Faces Challenges
Despite the vigorous push towards domestic technology, China faces significant challenges, primarily attributed to its limited capabilities in advanced chip manufacturing. This limitation hinders the country’s ability to fully realize a comprehensive substitution of foreign technologies with domestic counterparts. Additionally, sectors such as financial institutions have exhibited reluctance in transitioning towards domestic database systems, citing stability and reliability concerns.
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