According to Bloomberg, China has ordered government agencies and state-owned firms to replace their foreign personal computers (PCs) and software with local-branded ones.
The central government bodies mandate the directive, and Beijing wants a complete replacement within two years.
The source told Bloomberg that the move would likely replace at least 50 million PCs on just a central-government level.
The plan will later be applied to local governments within a two-year timeframe.
Bloomberg reported that the decision would probably hurt American-branded HP, Dell, and Microsoft in the China market. The local brand, Lenovo Group, is the top PC brand in the country, followed by American ones.
Lenovo’s stocks jumped as much as 5% on Friday morning in Hong Kong Stock Exchange.
The move is a part of China’s effort to gradually switch foreign-branded technology to local-made alternatives and reduce its reliance on foreign brands.
It also reflects growing concerns from Beijing for “decoupling” as the relationship between China and the U.S. sours.
In 2019, the U.S. banned its federal agencies from buying Chinese telecoms equipment maker Huawei, citing security threats. It also convinced European allies to kick Huawei out of the 5G network.
The Financial Times reported that analysts at Jefferies Group estimate that U.S. technology firms generate about 150 billion dollars in revenue per year in China. But private-sector buyers contribute much of that money.
Analysts also told the Financial Times it would not be easy to replace the software with local alternatives because most popular software are U.S.-made operating systems like Windows from Microsoft and macOS from Apple.
China’s local operating systems, like Kylin OS, have a much smaller ecosystem for developers to produce compatible software.