Report: China Pressures Domestic Banks To Replace IBM Servers

The Chinese government is reportedly pressuring domestic banks to replace high-end IBM servers with similar equipment manufactured within the country, as part of a national security review.

The review, which has not yet been made public, would seem to have been launched, in part, as a reaction to US prosecutors’ recent indictment of five Chienese military officers for allegedly hacking into computers of the US businesses. The review was reported by business news service Bloomberg, and cited unnamed people familiar with the matter.

Government security review

The review involves government finance agencies including the People’s Bank of China and the Ministry of Finance, as well as the National Development and Reform Commission, the China Banking Regulatory Commission and the Ministry of Industry and Information Technology, according to Bloomberg.

These bodies are reportedly investigating whether Chinese commercial banks’ reliance on IBM servers compromises the country’s financial security, and are to submit their findings to a working group on Internet security headed by President Xi Jinping. The Chinese government also believes IBM servers are more expensive in China than in other regions, according to Bloomberg’s sources.

According to the report, China Postal Savings Bank Co. has been using servers manufactured by Jinan-based Inspur Group since March 2013 as part of a trial programme that the government plans to expand to other banks.

China recently said it will vet technology companies operating in the country, and the China Central Government Procurement Centre has already excluded Windows 8 from a government purchase of energy-efficient computers, a move described by the state-operated Xinhua News Agency as intended to “ensure computer security”.

China has also ordered state-owned companies to cut ties with US consulting firms, according to a 25 May report by The Financial Times.

China is the world’s largest PC market, and sales of IT products in the country are expected to rise 11 percent this year to $125 billion (£78bn), according to Forrester Research.

Cyber warfare

The US indictment followed shortly after the circulation of photos that allegedly depicted US security agents opening crates of US-made IT products, intended for export, in order to insert surveillance equipment. The photos are part of the ongoing disclosure of information on the US’ mass spying activities which was started by Edward Snowden last summer.

The US National Security Agency (NSA) said that its programmes, which included placing spy tools into US-manufactured products are justified by the country’s wider role in maintaining world order.

Meanwhile, Chinese nationals may be excluded from US security conferences following the recent indictments, an unnamed senior US administration official told Reuters.

Such moves are part of ongoing tensions between China and the US.

In a 2012 report, the Intelligence Committee of the US House of Representatives alleged that Chinese manufacturers Huawei and ZTE could not be “trusted to be free of foreign state influence”, and “thus pose a security threat to the United States and to our systems”.

The report called for their products to be banned, and in fact Huawei withdrew from the US market in 2013, partly as a result of such pressures.

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