China Tells Its Banks To Replace IBM's Servers With Those Made By Local Companies After Cyber-Spying Row With US

Following the latest row over cyber spying between China and the U.S., the Chinese government is pushing its banks to replace their high-end computers made by New York-based International Business Machines Corp., or IBM, (NYSE:IBM) with domestic ones.

The People’s Bank of China and the finance ministry are examining whether the country's commercial banks are too dependent on IBM, Bloomberg reported Tuesday, citing sources, adding that the findings will be submitted to a group on Internet security led by President Xi Jinping. China's move closely follows its exchange of accusations with the U.S. over spying on government networks earlier this month.

"We haven't heard about the order," an official at one of the banks' IT departments said, according to Reuters, adding: "There aren't any locally made hardware around that can handle the massive amount of data in the banking industry."

The Chinese government also has reportedly ordered state-owned companies to break ties with American consulting firms, Bloomberg reported citing The Financial Times. Last month, China’s government excluded the order of Windows 8 operating systems, stating security reasons.

“Security trumps everything,” Duncan Clark, chairman of BDA China Ltd., said, according to Bloomberg, adding: “China doesn’t need the U.S. companies in the way it did for the last few decades.”

According to a study by Forrester Research Inc., cited by Bloomberg, China will purchase 11 percent more products related to information and technology in 2014, taking the total purchase amount up to $125 billion, creating risks for other U.S.-based companies like Microsoft.

“China’s government is in a strong position given Snowden’s disclosures,” Clark said, according to Bloomberg, adding: “If you give them an excuse, they will aggressively promote domestic brands.”

On May 20, in an unprecedented move, the U.S. government formally charged five Chinese officials with spying on American companies. On Monday, Beijing accused the U.S. of “unscrupulous” spying and large-scale computer attacks against the Chinese government and its companies.