China excluding many American tech majors from its list of approved software and hardware vendors for government purchases seems an irrational fallout of the Snowden-leaks of NSA espionage. Cisco, the networks giant, may be blaming China’s reaction to the leaks for its struggles in the Chinese market, but the country could have an entirely different interest. One of the most stringent digital censorship regime, China, has cut its list of approved foreign tech companies by a third—the list of approvals for those with security-related products has been cut by two-thirds—between 2012 and 2014, after American whistle-blower Edward Snowden said NSA routinely intercepted companies’ networks and inserted surveillance devices.
The list of US companies banned from being considered for government purchases in the Asian nation—this excludes local government, the military and state-owned enterprises as they have their own list of approved companies—has biggies like Apple, Microsoft, Kaspersky and Symantec on it. In a quid pro quo, Chinese firm Huawei, the largest network equipment-maker in the world, is barred from supplying to the government in the US. The question is: Who gains from Cisco’s near-elimination as a competitor in China? Clearly, Huawei. This raises doubts about China’s policy of exclusion—whether it has to do with thwarting espionage or promoting Chinese firms at the cost of competing foreign companies.