In response to a media report that China was escalating efforts to replace U.S, technology, Chinese foreign ministry spokesperson Zhao Lijian said on Thursday that China has no plans to replace foreign technology.
According to Bloomberg, China has empowered a government-backed organization to vet and approve local suppliers in sensitive areas such as cloud computing and semiconductors, in an effort to speed up plans to replace American and foreign technology.
The Information Technology Application Innovation Working Committee, which was reportedly founded in 2016, should help define industry standards and train individuals to operate reliable software.
Bloomberg reported the quasi-government body will devise and implement the "IT Application Innovation" plan, also known as Xinchuang in Chinese.
It will select from a list of vetted suppliers to provide technology for sensitive sectors ranging from banking to data centers that store government data, a market that could be worth $125 billion by 2025.
The existence of the Xinchuang white-list, whose members and overarching purposes have never been revealed, is expected to exacerbate tensions just as Chinese President Xi Jinping and U.S. President Joe Biden concluded up their first face-to-face virtual conference, the publication noted.
It provides Beijing greater leverage to replace foreign tech businesses in critical industries, according to reports, and accelerates an effort to help domestic champions attain tech self-sufficiency and avoid sanctions imposed by the Trump administration in domains like networking and chips.
Beijing's move to replace foreign suppliers is part of a larger effort to establish control over the country's enormous technology economy, which includes data security. The government has already pushed foreign cloud providers like Amazon Web Services and Microsoft to establish joint ventures to operate in the mainland.
Apple has also sold its user data storage business to a Guizhou-based company supported by the government.
The grip is poised to tighten as the ministry of technology and industry obtains more control over industrial and telecom data and proposes new rules requiring critical data to be stored within the country.
While few specifics about the Xinchuang committee or its members have been published, any businesses with more than 25% foreign ownership will be prohibited from the panel, thus locking out international suppliers such as Intel and Microsoft.
Chinese tech startups that are primarily funded by foreign capital will face even higher hurdles, according to the report, though Alibaba Group Holding and Tencent Holdings, the country's two largest cloud service providers, have managed to get around the rules by applying for membership through locally incorporated subsidiaries.