According to a Financial Times report, China's Central government has ordered all local offices to remove foreign hardware and software within three years, a move which could affect major U.S. firms including Microsoft (NASDAQ: MSFT), Dell (NYSE: DELL) and HP (NYSE: HPQ).
An estimated 20 to 30 million pieces of foreign equipment need to be replaced in China under this ban. China Securities said that the order had come from the Chinese Communist party's Central Office earlier this year. While the verdict is not public yet, two unidentified cybersecurity firms declared that their government clients already described the policy to them.
Also in the report, China will spend between now and 2022 transitioning off American hardware and software in favor of local alternatives.
This isn't the first time that China has publicly acknowledged American technology as persona non grata within its government. But the move may have more urgency this time as the country looks to push back against the broader geopolitical picture.
The Chinese government will also be looking into ways to better control the nation's internet and keep all its data within its borders, following the 2017 China Internet Security Law. One of its tentpole features is a rule to ensure that all technology is "secure" and "controllable".
Companies that will be influenced by this policy include Microsoft and Apple (NASDAQ: AAPL), who already have a testy relationship with the Chinese government. What will further complicate this matter is that many Chinese companies source key parts from foreign suppliers. For example, Lenovo sources chips from Intel (NASDAQ: INTC) and hard-drives from Samsung.
On the other hand, China's technology firms have been the target of U.S. regulatory pressure. Earlier this year, Huawei was placed on a U.S. blacklist which stopped American firms doing business with the Chinese telecom networking giant.
In October, Washington expanded its blacklist to include a number of Chinese surveillance firms like Hikvision, one of the world's biggest companies for such technology. A provision of a U.S. law known as the National Defense Authorization Act also prohibits executive government agencies from procuring telecommunications hardware made by Huawei and another Chinese firm, ZTE (OTC: ZTCOY).