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China shifts Tech strategy: Phasing out foreign microprocessors and software


China shifts Tech strategy, financial news

China's decision to exclude U.S. microprocessors, specifically from tech giants Intel and AMD, for use in its government computers and servers signifies a strategic redirection in its technological infrastructure. This decision, reported by the Financial Times, is a part of China's larger goal to lessen its dependence on foreign technologies.


It's a significant move in the context of global tech dynamics, as it illustrates China's intent to fortify its technological independence and self-sufficiency. This approach is reflective of a broader trend among nations to secure control over their critical technological infrastructures, thus safeguarding national interests and security.


The Chinese initiative is not limited to microprocessors; it also targets other key software components. There's a concerted effort to move away from widely-used Microsoft Windows operating systems and replace them with homegrown alternatives. The same goes for foreign-made database software, where again, the preference is for domestic versions as we read in Reuters.



This broad sweep in tech changes is a clear indicator of China’s drive towards technological autonomy. By focusing on local development and deployment of these technologies, China not only aims to enhance its cybersecurity but also seeks to boost its domestic tech industry, reducing reliance on international tech giants.


The implementation of this tech policy is widespread and systematic. Government agencies, starting from the township level and upwards, are now mandated to focus on purchasing technology that meets criteria for being "safe and reliable." This phrase is frequently used to indicate a preference for technologies that are under local control and are considered more secure against external threats or influences.


The directive underscores China's commitment to severing dependencies on foreign technology, reflecting a strategic shift towards self-reliance and national security in the digital domain.

The Chinese government’s approach has been methodical and transparent, at least in terms of the policy’s rollout. In a significant move, China’s industry ministry publicly released a statement in late December, detailing specific lists of CPUs, operating systems, and centralized databases.



These lists exclusively feature Chinese companies, showcasing a clear government endorsement and commitment to these local technologies. This action sets a clear procurement guideline for Chinese government agencies and is slated to influence the tech purchasing landscape in China for at least three years, marking a decisive shift in the nation's tech policy.


The response to China’s decision from key stakeholders has been notably muted. When approached for comments, the State Council Information Office, which is responsible for media communication on behalf of China’s cabinet, did not provide an immediate response. Similarly, neither Intel nor AMD, the U.S. tech firms directly affected by this policy, offered immediate comments.


This silence could be indicative of the complex implications of this policy, considering the intertwined nature of the global technology supply chain and the significant market that China represents for these global tech companies.



China's decision is set against the backdrop of similar moves by the United States aimed at strengthening its own semiconductor industry. The Biden administration’s CHIPS and Science Act of 2022 is a key policy initiative in this direction. Its main objective is to ramp up domestic production of semiconductors, a critical component in various advanced technologies.


The act includes substantial financial incentives for companies investing in semiconductor manufacturing within the U.S. This strategy is not only about advancing U.S. technological capabilities but also about reducing its reliance on other countries, notably China and Taiwan, for critical technology components. The act is a significant step in the U.S.’s effort to regain leadership in the global semiconductor industry.



Overall, the actions taken by China can be seen as part of a global trend where major powers are increasingly focusing on nationalizing their tech sectors. This move towards nationalization is not unique to China but is echoed by other global powers like the United States.


The fragmentation of the global tech landscape, as a result of these national strategies, suggests that geopolitical considerations are becoming increasingly dominant in shaping technology development and procurement policies worldwide. This trend might lead to a more divided global tech landscape, where each major power prioritizes its own technological capabilities and security over global cooperation and interdependence.


24.03.2024



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