A Bloomberg report on Tuesday says that IBM will probably become another US company suffering from the cyber security spat between China and the US. During the escalation of tensions, Microsoft and US-based consulting firms such as McKinsey have already suffered business setbacks in China.
It has been reported that Chinese authorities are pushing domestic banks to investigate whether high-end servers from IBM are compromising China's financial security. According to Bloomberg's source, Chinese domestic banks will be asked to replace the IBM servers with local brands, but the authenticity of the information has yet to be confirmed by the Chinese authorities.
Ever since the US charged five Chinese military officers last week with cyber espionage against US corporations, the impact of the cyber dispute has been widened to business sectors. Yahoo Daily Ticker raised concerns on Wednesday, asking whether a trade war across the Pacific is about to begin.
The US State Department responded sternly, condemning the Chinese government for seeking revenge. State Department spokeswoman Jen Psaki said "it doesn't provide … any justification for retaliation against US businesses or the US government."
Talking about "justification," the US might have forgotten that it is probably the last nation that has the right to condemn others over cyber security, based on what Edward Snowden, a whistleblower and former contractor of the NSA, has revealed.
What has happened or what will happen on US-based companies, especially those closely related to information security, is the consequence of China reinforcing its capability and prudence to defend cyber and information security, thanks to the US ratcheting up its espionage against China in recent years.
Few US businesses have been given a hard time over national security issues in Chinese market. Microsoft, IBM and McKinsey have been conducting their business and making handsome profits here for decades as long as they complied with Chinese laws.
But the case is the reverse when Chinese businesses, in particular emerging hi-tech companies, try to enter the US market. Huawei, a world leading networking and telecommunications equipment and services company, is always given a cold shoulder by the US government because of so-called national security threats. This prejudiced access has jeopardized the free market boasted of by the US all the time.
Without domestic alternative, China might have had to use the US-made IT products in the past. But recent years have seen domestic hi-tech companies growing up and taking on all comers. It would be wise of the US not to hold back its own businesses in China under such circumstances.