China rushes to swap Western tech with domestic options as U.S. cracks down

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BEIJING, Oct 26 (Reuters) - China has stepped up spending to replace Western-made technology with domestic alternatives as Washington tightens curbs on high-tech exports to its rival, according to government tenders, research documents and four people familiar with the matter.

SOEs were instructed last year to replace office software systems with domestic products by 2027, the first time such specific deadlines were imposed, according to five brokerage firms that cited a September 2022 order from China's state asset regulator.

An article published this year in the journal Cyberspace Security by researchers from the state-run China Telecommunications Corporation concluded the country was overdependent on chips made by U.S. giant Qualcomm (QCOM.O) for back-end management, as well as on the iOS and Android systems.

For years, Western tech companies have shared their source code and entered into partnerships with domestic firms to address Beijing's concerns, but prominent computer scientists such as Ni Guangnan of the Chinese Academy of Engineering have said such measures are not sufficient for China's security needs.

AmCham Shanghai President Eric Zheng acknowledged China's national security concerns but said he hoped "normal procurement procedures will not be politicized so that US companies can compete fairly and pursue commercial opportunities ... to benefit both countries."

Clients also prize Huawei for its ability to process data on internal company servers and external cloud networks, as well as its wide offering of cybersecurity products, according to the employee of a China Tobacco tech supplier.

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