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China tells state offices to junk foreign hardware, software

The trade war runs the risk of aggravation with new impositions if Washington and Beijing do not reach an agreement before the end of this year.

China tells state offices to junk foreign hardware, software


In first such retaliation against the Donald Trump government as the two largest economies in the world are currently locked in a long-running trade dispute, China has ordered all state offices to get rid of foreign hardware and software in the next three years -- a move that would hit top US companies like Microsoft, Dell and HP hard.

According to a report in the Financial Times on Monday, China's Communist Party has ordered all state offices to remove foreign hardware and software under a policy called "3-5-2" -- meaning reduce 30 per cent in 2020, 50 per cent in 2021 and 20 per cent in 2022.

The orders were forced out from the Chinese Communist party's Central Office "earlier this year", and while the policy documents are confidential, "employees from two cyber security firms have told the Financial Times that their government clients have also described the policy. The employees asked to remain anonymous as the information was politically sensitive".

Washington has earlier banned US companies from doing business with Huawei and expanded its blacklist to Chinese surveillance firms like Hikvision.

China's commerce ministry said last month that they had reached an agreement with Washington to phase out the duties that both sides had been imposing during the dispute but US President Donald Trump lowered expectations days later.

Chinese President Xi Jinping said during an economic forum in Beijing that his country wanted to work on an agreement based on "mutual respect and equality," but that it was not China that started the conflict and it would retaliate if necessary.

The latest escalation in the trade war, which has resulted in successive tariff hikes from both countries for nearly two years, happened on September 1 with a 10-15 per cent increase in tariffs from Washington on Chinese imports worth $112 billion.

It remains to be seen whether on December 15 the same increase of up to 15 per cent will apply to all other US imports from China, the total value of which would reach $300 billion.

Impact of the trade tensions between the world's two largest economies has not been confined to the bilateral sphere and has had global ramifications.

Trump last week criticized the World Bank for loaning money to China on low-interest rates and urged the institution to stop lending to Beijing.

"Why is the World Bank loaning money to China? Can this be possible? China has plenty of money, and if they don't, they create it. Stop," Trump tweeted.

Trump's criticism comes after the World Bank on Thursday adopted a plan to lend China $1 billion to $1.5 billion in low-interest loans annually for the period between 2020 and 2025.

Besides, Trump recently enacted two bills in support of protests in Hong Kong that provide for sanctions against Chinese officials. The move has angered Beijing.

The US Congress is now considering another bill in support of Muslim minorities in the Xinjiang Uighur Autonomous Region, which also provides for sanctions against Beijing officials.

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