China Takes A Second Look At Bank IT Procurement Bans

Earlier this year, China raised eyebrows when reports said the nation’s officials had banned state-run agencies, including banks, from procuring IT services from foreign suppliers, including Apple, Cisco, IBM and Microsoft. The latest reports, however, suggest that China may be easing up on those restrictions.

Reuters reported last week that federal officials have notified overseas IT vendors, including those aforementioned, that it would be reviewing the rules previously put in place that prevent Chinese banks from procuring services from these companies, including cloud computing and servers.

The China Banking Regulatory Commission is said to have notified these tech firms that it would be reviewing existing rules and accepting feedback following backlash from the procurement banks by lobbyists and foreign governments, reports said.

Officials’ earlier rules restricted banks’ ability to obtain IT services from foreign companies on grounds that banks and other entities should instead be procuring goods and services from local suppliers. Critics, however, decried China’s demands that an IT service provider, foreign or domestic, had to reveal source codes as a matter of national cybersecurity.

Others argued that the rules went against guidelines imposed by the World Trade Organization, of which China is a member.

That plan was halted in April. According to reports, China’s confirmation of plans to revisit those rules is a sign of diplomacy among Western players in the U.S. and Europe. The rules, however, resumed, reports said, as China continues with its national security efforts.

According to Reuters, even if China did reverse its rules, analysts suspect that state-owned banks would still be informally discouraged from procuring from Western businesses. Microsoft, IBM and Cisco did not comment on the matter, and reports did not indicate whether Apple would be affected by the potential rule changes.

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