As many Western media reports said, US sanctions ended up accelerating China’s chip self-sufficiency. The Communist Party of China (CPC) has invested tens of billions in state subsidies and research and development to bring it closer to forging its own chips under the 7-nm nodes. 

The ‘semiconductor war’ also has a significant geopolitical overlap. The world’s largest semiconductor foundry, the Taiwan Semiconductor Manufacturing Corporation (TSMC), which has been restricted from selling chips to China, would be destroyed if Beijing decides to take the island by force and disrupt the global supply.

This is a major geoeconomic-technological calculation that shapes China’s policy on Taiwan, which still leans heavily towards “peaceful reunification.” 

‘Replace US Chips, Software In Govt Computers’

According to FT, the new measures were introduced by the Finance Ministry and Ministry of Industry and Information Technology with “little fanfare” on December 26 last year. Chinese officials gradually began “following” the new “PC, laptop, and server” rules this year in what appears to be a low-key effort. 

The latest measures came after Washington imposed “sanctions on a growing number of Chinese companies on national security grounds, legislated to encourage more tech to be produced in the US, and blocked exports of advanced chips and related tools to China.” 

Chinese authorities have now ordered “government agencies and party organs above the township level” to include criteria requiring “safe and reliable” processors and operating systems when making purchases.

In December 2023, the China Information Technology Security Evaluation Center published its first list of “safe and reliable” processors and operating systems from Chinese companies. 

Among the 18 approved processors were chips from Huawei and the state-backed group Phytium. Both are on Washington’s export blacklist. “Chinese processor makers are using a mixture of chip architectures, including Intel’s x86, Arm, and homegrown ones while operating systems are derived from open-source Linux software,” the report added. 

Beijing’s procurement revamp is part of a national strategy for technological “autarky” in the military, government, and state sectors that has become known as XinChuang or “IT application innovation.” A local government IT official quoted by FT said the standards “are the first nationwide, detailed and clear instructions for the promotion of Xin Chuang.” 

Likewise, SOEs were told by the State-owned Assets Supervision and Administration Commission to complete a technology transition to domestic providers by 2027. Since last year, state groups have begun quarterly reporting on their progress in revamping their IT systems, “though some foreign technology would be allowed to remain.”