Decoupling of the two largest economies in the world is picking up speed. On Monday, it was announced in China that the government ordered the replacement of foreign computer hardware and software with domestic products throughout the administration of the vast country for the next three years.
A report from the Financial Times on the order given by the Communist Party headquarters earlier this year has been confirmed in Chinese government circles. However, the authorities had not yet begun to implement the plan.
“China will replace foreign computer hardware and software with domestic product in three years”
According to the regulation, as early as next year, 30 percent of all computers and programs produced by foreign companies such as Microsoft and Dell will be replaced. In the following year, another 50 percent will be added, in the third year then the remaining 20 percent. It is estimated that the number of computers in Chinese officials’ offices are approximately 30 million.
The order from Beijing hits American companies whose supply chains and production chains are increasingly under pressure in their homeland. Politicians fear that Chinese companies with American money and technology could become world market leaders.
“Economic and technological decoupling of the two economies remains fraught with great difficulties”
A congressional commission warned in its published annual report that China is pursuing the goal of technological hegemony at all costs. Foreign companies are victims of technology theft or forced to cede technical knowledge to their Chinese partners. Beijing continues to run industrial espionage, threatening America’s national security. The authors of the report point out that China is currently proclaiming the goal of modernizing the Chinese People’s Army.
The technological race of the armed forces of both the countries is increasingly becoming the focus of public debate. It is fueled by politically active employees of Silicon Valley companies who oppose supply contracts with the Pentagon and US security agencies. Amazon founder and CEO Jeff Bezos commented over the weekend. “When the tech giants return to the Ministry of Defense, the country gets into trouble”, he warned, “that just can not happen”.
“Beijing continues to run industrial espionage, threatening America’s national security” – US congressional commission report
He understand the emotions. That was an important topic. Employees have a right to their opinion, but the management should not give in to corresponding demands. His company will support the Pentagon.
Bezos thus alluded to a spring Google decision not to proceed with the evaluation of drone videos for the Department of Defense. Thousands of Google employees spoke out against the project. Bezos also warned that China could move away in space technology should America not step up its efforts.
“When the tech giants return to the Ministry of Defense, the country gets into trouble” – Jeff Bezos
The US government has now responded to foreign – Chinese aspirations to buy American high – tech companies with stricter investment rules. Chinese venture capital, which plays a major role in start-up funding in America, flows more sparingly.
Nevertheless, the economic and technological decoupling of the two economies remains fraught with great difficulties. For the Chinese network supplier Huawei, for example, the US Department of Commerce allows for exceptions. The group also complains against the business restrictions.