Tech cold war is a fact. China tells government offices to remove all foreign computer equipment

[Marcin + 519]

China tells government offices to remove all foreign computer equipment

Directive is likely to be a blow to US multinational companies like HP, Dell and Microsoft (article from Guardian)

Chinese president Xi Jinping has ordered that all foreign hardware be removed from government offices and agencies. Photograph: Pool/Getty Images

China has ordered that all foreign computer equipment and software be removed from government offices and public institutions within three years, the Financial Times reports.

The government directive is likely to be a blow to US multinational companies such as HP, Dell and Microsoft, and mirrors attempts by Washington to limit the use of Chinese technology, as the trade war between the countries turns into a tech cold war.

The Trump administration banned US companies from doing business with the Chinese telecoms company Huawei this year and Google, Intel and Qualcomm announced they would freeze cooperation with Huawei.

By excluding China from western knowhow, the Trump administration has made it clear that the real battle is about which of the two economic superpowers has the technological edge for the next two decades.

This is the first known public directive from Beijing setting specific targets limiting China’s use of foreign technology, though it is part a wider move within China to increase its reliance on domestic technology.

The FT reported that the directive would result in an estimated 20m to 30m pieces of hardware needing to be replaced and that this work would begin in 2020. Analysts told the FT that 30% of substitutions would take place in 2020, 50% in 2021 and 20% in 2022.

The order had come from the Chinese Communist party’s central office earlier this year, the analysts said. Two employees from cybersecurity firms told the paper that government clients had described the policy.

Replacing all the devices and software in this timeframe will be challenging, given that many products were developed for US operating systems such as Windows. Chinese government offices tend to use desktop computers from the Chinese-owned company Lenovo, but components of the computers, including processor chips and hard drives, are made by American companies.

In May, Hu Xijin, the editor of the Global Times newspaper in China, said the withdrawal of sharing by US tech companies with Huawei would not be fatal for the company because Huawei has been planning for this conflict “for years” and it would prompt the company to develop its own microchip industry to rival America’s.

“Cutting off technical services to Huawei will be a real turning point in China’s overall research and development and use of domestic chips,” he said in a social media post. “Chinese people will no longer have any illusions about the steady use of US technology.”

Edited December 22, 2019 by Marcin
typos

[Marcin + 519]

This move could seem insignificant as is it is only about 20 to 30 million users, but as always in Chinese strategy as guided by Deng Xiaoping saying "cross the river by feeling the stones" it is just the pilot.

It is typical for China to test and improve the idea on the small sample of users. So new policies are first launched in 1 province for a few years. They are tested and fine tuned and later expanded to all of China or shelved.

The same is with idea of fully indigenous PC: with all software and hardware of domestic origin. It will be launched and tested on the small sample of 20-30 million users before being extended to other 1 billion users (1,000 million users).

Process of changing current software: Windows, MS Office and other applications and at the same time hardware to Chinese would be long and difficult. But in a few years, with technology cold war being broadened by the United States it is the only solution.

Think for a while what would happen if all US companies are prevented from supplying any Chinese citizen -> the clear direction of US authorities recent actions.

China just wants to prevent this scenario from becoming reality. The next moves will be very difficult for US companies.

In less than 10 years all US software & hardware companies would be banned from acting on Chinese market (already the largest in the world). Like it is today with Huawei. You know using Windows becomes felony against national security.

Next Chinese moves would be to roll out this software and hardware to all countries in the world, first to Belt and Road countries, maybe free of charge to make it standard for 5 billion people.

My advice: do not buy Microsoft, HP or Dell for your long-term portfolio (longer than 5 years), and watch which Chinese companies are chosen for 30 million users pilot, you can make a killing.

 

[remake it + 288]

1 hour ago, Marcin said:

My advice: do not buy Microsoft, HP or Dell for your long-term portfolio (longer than 5 years), and watch which Chinese companies are chosen for 30 million users pilot, you can make a killing.

In the cell phone (or "mobiles") market Samsung has shown Apple that it's very hard to remain #1 while Huawei through price point and sheer weight of sales numbers shows that playing catch-up with technology is no impediment to utility.

[Tomasz + 1,608]

IMHO China in new Cold War should also much more actively promote Edward Snowden book  all over the world .  

They should also prepare a blockbuster book called  "USA according to wikileaks"

Constant reminder of whole NSA story and his findings is best response to Huawei spygate.

 

Intended effect

China can always claim  thats true  the internet in China is heavily censored but on the other hand US is spying on its own citizens on a massive scale with the help of Google and probably other technology companies

Strategically, such compromise as Snowden's revelations must not be forgiven

Edited December 23, 2019 by Tomasz

[Jan van Eck + 7,558]

9 hours ago, Marcin said:

My advice: do not buy Microsoft, HP or Dell for your long-term portfolio (longer than 5 years), and watch which Chinese companies are chosen for 30 million users pilot, you can make a killing.

In all candor, your advice is no bloody good. 

[Marcin + 519]

57 minutes ago, Jan van Eck said:

In all candor, your advice is no bloody good. 

But Jan, in 3 years Microsoft will loose important part of Chinese market, the largest in the world. What is natural next step, you want to supply anything to Chinese government or state owned companies need to ensure security of your client. Security means ni usage of foreign ( read American software and hardware). They will probably give another 3 years for application of these changes. 

This is nothing special, it is only mirroring current US regulations.

Second step would make MS software anathema for medium and large companies in China. Losing all Chinese market would certainly have impact on Microsoft stock. It is all highly speculative.

But remember China cannot use any US software, hardware, technology long-term.

There is no return to the past pre 19 May 2019 date of Huawei ban.

You ban access to Android for 20% of humanity with one impulsive signature you are forever unreliable and dangerous supplier of anything for anybody.

Containment of aspirations of Chinese nation was the real cause of all this embargos. I can imagine that Americans believe in all this unsophisticated, with no proof explanations, even in evil metro wagons supplied by Chinese company yet manufactured in US. This is my favorite for lame excuse in 2019.

I do not judge Americans, probably some wise strategist run different scenarios and this one seems the most beneficial for long-term US interests.

Edited December 23, 2019 by Marcin
Typo

[remake it + 288]

1 hour ago, Marcin said:

You ban access to Android for 20% of humanity with one impulsive signature you are forever unreliable and dangerous supplier of anything for anybody.

Looks like the tech war in China is dumping IOS in a big way

The US market is paltry (below data is at March 2019 and today it's estimated that more cell phones are registered than there are people)

10 Countries With The Highest Rates Of Cell Phone Subscriptions

Rank	Country	Cellphones
1	China	1,320,810,000
2	India	1,175,997,150
3	United States	327,577,529
4	Brazil	284,200,000
5	Russia	256,116,000
6	Indonesia	236,800,000
7	Nigeria	167,371,945
8	Bangladesh	157,048,000
9	Japan	146,649,600
10	Pakistan	150,169,643

 

[Jan van Eck + 7,558]

45 minutes ago, Marcin said:

Containment of aspirations of Chinese nation was the real cause of all this embargos.

Nope.  What is escaping you is that nobody in the USA or Canada or Europe even gives a second thought to the aspirations of the Chinese nation,  Likely the only person on the European Continent that is thinking about these issues is you.  Certainly not in America.  Nobody here cares; nobody here even thinks about it. 

Nor should they.  What you do not grasp is that China is already in a population deflation, a "death spiral" of numbers collapse.  You think of China as being the great, expanding, dynamic society.  Nothing could be farther from the truth.  China's immediate future is to turn into a society of old people, probably a lot of very old people, who will contribute nothing to the economy but be very expensive. China is already short at least 60 million women.  There are now at least 60 million men with no wives, and no prospect of ever having a wife, and thus condemned to a life of sexual celibacy, or alternatively to convert to homosexuality.  That is a very destabilizing prospect for the regime.  What are you going to do?  Try to import wives from Taiwan?  No chance; those 60 million men are peasant boys, they have nothing to off er in a society that is rapidly urbanizing.  Cambodia?  Again, who wants to go, to live away from family with some Chinese peasant man?  Not much luck there.  And there is your problem.  You cannot put them in the Army, then the disaffected have guns, and that becomes very dangerous to the regime. 

China's population collapse is the direct result of two paths:  the idea in the past of a one-child policy, and rapid urbanization.  The women can be very picky in choosing husbands, so they pick urban, wealthy or wealthier men.  Those women have access to education and new values that do not include families with children.  So China now has a fecundity rate of only 1.5, and you need 2.1 just to stay even.  In two generations China is a collapsed society.  It is headed for poverty, to be a lot poorer than it is today. 

You see the same thing in Russia, and in Ukraine.  Both have these low fecundity rates, running around 1.5-1.6.  Ukraine particularly has both low fecundity, urbanization, and emigration.  that is deadly.  The population will drop by half in one generation.   In Russia, you have a drop in life expectancy, a fecundity rate of about 1.6, and population collapse.  Absent migration in from the Muslim outlier States, Russia will shrivel up and wither away; its destiny is to vanish. 

The USA has a fecundity rate of about 1.95.  Not so great, but it has lots and lots of immigrants that keep the population expanding.  The USA will remain a dynamic society.  So will Canada, which despite a fecundity rate of 1.6 continues to expand due to the vast immigration into the country.  I predict Canada is heading towards 100 million, and will be a much bigger player on the world stage.  In one generation or less, Canada will have the equal population of Germany.  The USA will continue to march past 325 million, and I believe the number today is closer to 350 million, as there are likely some 25 million Canadians living here that are undocumented.  When a Canadian college girl marries an American visiting student and she moves over the Border to Buffalo, she effectively had a fatal car crash as far as Canadian fecundity rates are concerned.  She vanishes from the Canadian registry.  You have the same thing with impoverished Ukrainian secretaries making $400 a month, moving to Western Europe to advance themselves - and marry a European man.  Ukraine suffers a population collapse, and will not have either the money or the numbers to ever challenge the Russians in the Donbass - and those Russians are also vanishing, the ones remaining being surplus violent men, and criminals, that Moscow sends there to keep them from doing robberies in the Russian cities.  Single men without women are dangerous.  Involuntary celibacy leads to disaffection, and anger with the Government.  That reaction is universal. 

SO China is facing its demographic crossroads.  You see China as this burgeoning powerful society; that is a mistake.  Some 25% at least of Chinese GDP is building infrastructure that is not even needed, like entire cities that remain empty because nobody can buy in.  What are you going to do - move the peasants in and urbanize them, with no jobs and no future, and no wives?  You can't do that.  Far too risky.  So China will have to resort to repression, a new surveillance State, and that will result in poverty.  China may stay in one piece, but only as a poor, agricultural society.  The big industrial push is going to fail, because their population is collapsing. 

China has tried to combat all this by their mercantilist trade policies.  Both the West in the USA, and in Europe, have been mild in their reactions, until Trump came along.  He put a stop to it, and the slide into negative fecundity becomes irreversible.  Say good-bye to China. And also to Russia.   And tht is why nobody much cares in the USA;  it is headed for oblivion anyway. 

[remake it + 288]

18 minutes ago, Jan van Eck said:

Nope.  What is escaping you is that nobody in the USA or Canada or Europe even gives a second thought to the aspirations of the Chinese nation,  Likely the only person on the European Continent that is thinking about these issues is you.  Certainly not in America.  Nobody here cares; nobody here even thinks about it. 

And yet there are these trade wars affecting global market confidence suggesting your commentary is wholly lacking in real-world perspective.

[Dan Warnick + 6,100]

@Jan van Eck  Jan, what about the affect of the average American not buying Chinese products if at all possible?  I mean, if I buy something on Amazon I almost always go into the questions and comments to see what others have to say, and one of the most common questions i see is: where is this made?  If the answer is China, people will offer up advice as to what or where you can buy American, or at least not in China.  I'm serious in asking this question as I don't know the answer.  It seems that if there is a massive trade deficit between China and the US, then if Americans stop buying Chinese made goods wherever possible, that means China no longer sells into the largest consumer market in the world and hence loses $100s of billions a year?  Won't this close more than a few factories in China?  Maybe thousands of companies?  Does that make sense?  I think it does.

Edited December 23, 2019 by Dan Warnick

[Jan van Eck + 7,558]

3 minutes ago, Dan Warnick said:

@Jan van Eck  Jan, what about the affect of the average American not buying Chinese products if at all possible?  I mean, if I buy something on Amazon I almost always go into the questions and comments to see what others have to say, and one of the most common questions i see is: where is this made?  If the answer is China, people will offer up advice as to what or where you can buy American, or at least not in China.  I'm serious in asking this question as I don't know the answer.  It seems that if there is a massive trade deficit between China and the US, then if Americans stop buying Chinese made goods wherever possible, that means China no longer sells into the largest consumer market in the world and hence loses $100s of billions a year?  Won't this close more than a few factories in China?  Maybe thousands of companies?  Does that make sense?  I think it does.

Yes.

Keep in mind that the largest importer of Chinese-made consumer goods is WalMart.  That trade is $60 billion a year, one entity. 

Edited December 23, 2019 by Jan van Eck

[remake it + 288]

18 minutes ago, Dan Warnick said:

It seems that if there is a massive trade deficit between China and the US, then if Americans stop buying Chinese made goods wherever possible, that means China no longer sells into the largest consumer market in the world and hence loses $100s of billions a year?

European market is more than twice the size of USA while Asia exclusive of China has a market 10 times that of USA so America over time will be of little consequence.

[Dan Warnick + 6,100]

11 minutes ago, remake it said:

European market is more than twice the size of USA while Asia exclusive of China has a market 10 times that of USA so America over time will be of little consequence.

Massive "consumer market" v. "consumers".  There's a difference, mate.  In other words, this is not simply a headcount.

[remake it + 288]

7 minutes ago, Dan Warnick said:

Massive "consumer market" v. "consumers".  There's a difference, mate.  In other words, this is not simply a headcount.

So 750 million people in Europe is smaller than 330 million in USA while China is expanding into new markets at a greater share than USA!

[Dan Warnick + 6,100]

12 minutes ago, remake it said:

So 750 million people in Europe is smaller than 330 million in USA while China is expanding into new markets at a greater share than USA!

You didn't catch that distinction between "market" and "headcount", did you now?  Bless your heart.

Edited December 23, 2019 by Dan Warnick

[Dan Warnick + 6,100]

The 25 Largest Consumer’s Markets

 

[Dan Warnick + 6,100]

Ranked: Top 10 Countries by Consumer Expenditure

[Marcin + 519]

29 minutes ago, Dan Warnick said:

Ranked: Top 10 Countries by Consumer Expenditure

Dan,

For such comparison the size of retail market (without catering) should be taken. Most of services are domestic, localized you cannot sell haircut on foreign market.

In retail market comparisons US market in 2019 is still about 10% larger than Chinese. 

Most of masa media claim that Chinese market is already larger than US but this fallacy is sourced in the wrong analysis of statistics.

It is about 5.6 for China and 6.1 for US trillion of USD 

 

[remake it + 288]

13 minutes ago, Dan Warnick said:

You didn't catch that distinction between "market" and "headcount", did you now?  Bless your heart.

The USA accounts for less than 20% of China's trade and apart from that China has a massive internal market so when coupled with where China is heading the US becomes a bit player over time.

[remake it + 288]

On topic China's penetration of India's cell phone market is numerically greater than the entire number of users in the USA and this dominance  will flow into other developing nations as OBOR/BRI aka Belt & Road expands.

[Dan Warnick + 6,100]

Well, you guys are something...

You totally discount @Jan van Ecks discussion points and you also, apparently, discount the loss of consumer goods purchases from China by U.S. consumers and what effect that may have on Chinese factories.  Er, ok!

[remake it + 288]

20 minutes ago, Dan Warnick said:

Well, you guys are something...

You totally discount @Jan van Ecks discussion points and you also, apparently, discount the loss of consumer goods purchases from China by U.S. consumers and what effect that may have on Chinese factories.  Er, ok!

Perhaps there were very good reasons for doing so especially given global trading trends and the comparative advantage of China over the USA to emerging economies.

[Marcin + 519]

30 minutes ago, Dan Warnick said:

Well, you guys are something...

You totally discount @Jan van Ecks discussion points and you also, apparently, discount the loss of consumer goods purchases from China by U.S. consumers and what effect that may have on Chinese factories.  Er, ok!

Look @Dan Warnick and @Jan van Eck I am on the move and argumentation by Jan needs some elaborate explanations , he is partially right and partially wrong. Jan I know the source of your narrative, yet if you would do independent research some of your conclusions would be different. Most of fertility rates you get right, future of Chinese demographics is 40% right, impact on economy and society 25% right.

I do understand @remake it argumentation, again he is partially right, but you guys more than him.

 

[remake it + 288]

2 hours ago, Jan van Eck said:

Some 25% at least of Chinese GDP is building infrastructure that is not even needed, like entire cities that remain empty because nobody can buy in. 

People were saying that 20 years ago and lo and behold those ghost cities of the past are largely occupied nowadays having contributed to China's massive transformation from a rural to a predominantly urban economy.

[Marcin + 519]

Loss of Chinese consumer goods purchases by US consumers has impact but this exagerrated by you guys, again I understand your sources, I have explained this at least a few times so would give a link when have access to sth more than this lphone screen too small for my fat fingers.