China's great technological decoupling from the West continues apace. The latest broadside from Beijing is aimed at blocking U.S. and Israeli cybersecurity vendors, reportedly over fears that their wares might leak Chinese information to governments or third parties. The report comes from Reuters and cites two unnamed sources "briefed on the matter." At this point, there's no telling which Chinese companies or state agencies have been issued this directive, but chances are that the list includes large state-owned corporations and government offices.
The affected stateside vendors are VMWare (Broadcom), Palo Alto Networks, and Fortinet. The ban also affects Israel-based Check Point Software. It's not just a "remote" ban, either, as all those companies have a physical presence in China and/or Hong Kong.
Although this development is probably not very surprising given how the U.S.-China relations have been going of late with regard to tariffs and technology, it's also part of a much larger plan. China's Xinchuang initiative reportedly targets a 2027 deadline for state-owned companies and offices to replace 100% of foreign software with national alternatives.
The initiative itself is actually quite old, but the past few years saw an escalation in pace and pitch. A 2022 directive amended to the initiative, listed as Document 79, seemingly contains direct orders to replace foreign software in critical areas, including but not limited to office automation, document management, HR systems, CRMs and ERPs, financial management, and core hardware, server, and operating systems. The directive is informally known as "Delete America" or "Delete A".
This latest move comes in against a backdrop of gigantic Chinese investment in chip-making technology, in a bid to end reliance on U.S.-designed and Taiwan's manufactured-chips. Given how the U.S. has previously blocked the sale of Blackwell chips, and China replied by blocking the imports itself, assuredly in favor of homegrown alternatives, this war is unlikely to end anytime soon.
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