Trade war: China plans to Purge Foreign Technology including MS Windows, Replace With Homegrown Tech.

China is aiming to purge most foreign technology from banks, the military, state-owned enterprises and key government agencies by 2020, stepping up efforts to shift to Chinese suppliers, according to people familiar with the effort.

The push comes after a test of domestic alternatives in the northeastern city of Siping that was deemed a success, said the people, who asked not to be named because the details aren’t public. Workers there replaced Microsoft Corp.’s (MSFT)Windows with a homegrown operating system called NeoKylin and swapped foreign servers for ones made by China’s Inspur Group Ltd., they said. 

The plan for changes in four segments of the economy is driven by national security concerns and marks an increasingly determined move away from foreign suppliers under PresidentXi Jinping, the people said. The campaign could have lasting consequences for U.S. companies including Cisco Systems Inc. (CSCO), International Business Machines Corp. (IBM), Intel Corp. (INTC) and Hewlett-Packard Co.

“The shift is real,” said Charlie Dai, a Beijing-based analyst for Forrester Research Inc. “We have seen emerging cases of replacing foreign products at all layers from application, middleware down to the infrastructure software and hardware.”

“I see a trade war happening. This could get ugly fast, and it has,” said Ray Mota, chief executive officer of Gilbert, Arizona-based ACG Research, who expects the issue to result in direct talks between the U.S. and China. “It’s not going to be a technology discussion. It’s going to be a political discussion.”

In September, the China Banking Regulatory Commission ordered banks and finance agencies to ensure that at least 75 percent of their computer systems used safe technology by 2019. The regulator called on financial institutions to dedicate at least 5 percent of their IT budgets towards the goal.

While the CBRC policy doesn’t make a distinction between foreign and domestic products, it says banks must favor companies who share their “core knowledge and key technology.” It also cautions banks from relying too heavily on one supplier.

Ref
http://www.bloomberg.com/news/2014-12-17/china-said-to-plan-sweeping-shift-from-foreign-technology-to-own.html