Amid the escalating trade and technology war with the United States, China is pushing ahead with its “Delete America” mission to become self-sufficient in information technology, The Wall Street Journal reports.
China instituted Delete America in September 2022 as the U.S. escalated its semiconductor chip export restrictions and sanctions on Chinese tech companies.
Just as the U.S. has national security and competitive concerns over China’s chips, artificial intelligence, smart cars, TikTok, and dominance of the world’s supply chain — China is equally motivated to shore up its self-sufficiency and long-term security.
This is all part of China President Xi Jinping’s yearslong push to make China less dependent on the West, for everything from significant technology as fighter jets and semiconductors, to raw materials, food and energy.
Delete America, also known as Document 79, requires state-owned firms to report each quarter on their progress on weaning off of U.S. and Western technologies, replacing them with China tech.
Delete America is now trickling down to private companies, according to a Morgan Stanley survey of chief information officers — even when the quality of the Chinese products is inferior and CIOs are reluctant to buy local.
The first area to be replaced was hardware, followed by software, cloud servers and, even, last year government officials ordering their staffs to use Chinese phones instead of Apple’s iPhone.
Evidence of the decline in U.S. IT companies’ dominance in China is overwhelming. Dell, Intel, Hewlett Packard Enterprise, International Business Machines and Cisco Systems equipment has been gradually replaced with that of Chinese competitors, such as Huawei and Alibaba.
For instance, Cisco revealed in 2019 it was losing orders to local vendors. Researcher Canalys says Dell’s market share has been halved in the past five years to just 8% today. Database provider FactSet estimates that in 2018, Hewlett Packard earned 14.1% of its revenue selling services, storage and networks in China. By 2023, that was a mere 4%.
Microsoft and Oracle are also losing ground on software. A recent poll by Morgan Stanley of 135 CIOs in China found many expect to replace the Microsoft Windows operating system on their computers in the next three years.
Research group Gartner said that Chinese-based technology companies commanded more than half of the market in China for the first time in 2022, selling $6.3 billion worth of technology.
More fire was poured on the fuel of Xi’s “buy China” vision in 2013, when Edward Snowden, the former National Security Agency contractor, said U.S. authorities had hacked into Chinese’s mobile phone networks, universities and private companies.
China is betting big on its homegrown technology, which it views as secure and trustworthy.
On Tuesday, during China’s annual legislative sessions, Premier Li Qiang said the national government will increase its spending on science and technology by 10% to $51 billion in 2024, compared to a 2% increase in 2023.
As to whether technology exclusively made in China will give it a competitive advantage, or disadvantage, that remains to be seen.
For now, as business consultant Han Lin, head of the Asian Group, puts it, China hopes “continuous feedback from users will be the advantage of domestic providers.”
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