China Speeds Up Replacement of Western PCs and Other Tech

News
By Anton Shilov
published

But foreign companies continue to dominate China's IT landscape.

TaihuLight
(Image credit: South China Morning Post)

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.

Anton Shilov
Anton Shilov
Freelance News Writer

Anton Shilov is a Freelance News Writer at Tom’s Hardware US. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.

8 Comments Comment from the forums
  • ivan_vy
    the sanctions just sped up the transition, US can't keep a giant on a leash, China's own market is big enough to keep sales and revenue for R&D of new products flowing. the question for the replacement was not if but when. The one concerned should be Russia, will shift a technological master for another.
    Reply
  • bit_user
    One of the bigger long-term risks I see is that they start developing their own technology standards - networking protocols, cabling & interconnect standards, etc. Then, by virtue of their size and scale, they produce & export so many products implementing these new standards to neutral & fairly green field markets, like much of South America, Africa, and parts of Asia, that the West has to adopt China's standards if they want to play in those markets. That would put the West at a potential disadvantage.
    Reply
  • Colif
    makes sense, why would you keep using a tech that might have hidden backdoors in it. Its same argument used against using Chinese tech. It goes both ways.
    Reply
  • bit_user
    Colif said:
    makes sense, why would you keep using a tech that might have hidden backdoors in it.
    I'm not sure if it's as much about back doors as just not having supply or support suddenly get cut off. Those are very real concerns that we've recently witnessed firsthand.
    Reply
  • ohio_buckeye
    Hopefully this isn’t seen as to political, but if I were them I wouldn’t want to feel like I was dependent on tech from other players if I felt I were at odds with them. I’ll just leave it at that.

    But as someone above said, they’ve gotten quite a bit of influence in Africa and South America as well as other areas I’m sure. They’ve got some companies making their own gpus, as well as they seem to be doing decently at making ssds as well so they appear to not be too far off of making the entire pc themselves. If they can get CPUs and motherboard chipset combos rivaling even the Intel 7000 series that would be pretty good and I’m sure would accelerate as time went on. If you could achieve this and sell for a lower price or subsidize it to incentivize others to try the new tech, it’s not hard to imagine you’d make inroads in emerging markets which could make you a lot more money down the road.
    Reply
  • JudasGoat
    Colif said:
    makes sense, why would you keep using a tech that might have hidden backdoors in it. Its same argument used against using Chinese tech. It goes both ways.
    China's tech will have it's own "backdoors". That is what is important to the CCP.
    Reply
  • Timmy!
    Colif said:
    makes sense, why would you keep using a tech that might have hidden backdoors in it. Its same argument used against using Chinese tech. It goes both ways.

    The article doesn't mention security being a concern as far as hardware goes, so maybe China is too subtle to raise that as part of its rationale. Some years ago, Germany looked like it might go for typewriters in government work instead of using US hardware, over concerns about the US spying on them. The US and Germany are allies, don't forget.

    The article in the link below mentions this, as does the German government reportedly banning iPhones use for intra-governmental communications:

    https://www.theguardian.com/world/2014/jul/15/germany-typewriters-espionage-nsa-spying-surveillance
    Not sure how that typewriter suggestion developed.

    It would be nice to have the choice of not being spied on by either the US or China when you are just an ordinary citizen. Maybe it should be opt-in?
    Reply
  • Colif
    Everyone is up to it, so its funny when one side complains that the other is doing what they are doing... but anyway.
    Reply