The dispute between China and the USA over backdoor-riddled information technology equipment has just heated up, with Bloomberg reporting Chinese authorities are wondering whether the time has come for local banks to ditch their IBM servers.
The newswire's report mentions “high-end” servers and suggests Chinese authorities “are reviewing whether Chinese commercial banks’ reliance on the IBM servers compromises the country’s financial security.”
As is the often the case with Chinese government policies, this one needs some deep consideration, not least because if banks are using “high-end” servers that suggests either POWER systems or mainframes are in China's sights. Banking applications written for either platform are generally very tightly coupled to hardware. Ordering Chinese users to find alternatives – either with new hardware or by porting software to another operating system - would not be something most could accomplish in a hurry.
China surely knows this and that any order to change would be futile for at least a few months. Such an order would also telegraph to the USA or other powers the need to find another attack vector.
Might China therefore be taking aim at an American icon? IBM's hardware division is not in rude health. Even the mere suggestion Big Blue is in cahoots with US authorities won't make it any easier to shift boxes, making life harder for IBM at a time it needs to be fighting off spookware allegations like it needs a hole in the head.
Yet the mere suggestion China is interested in kicking IBM when it is down is useful, as a muscle-flexing exercise in which Beijing tells Washington it can hurt US industry with the stroke of a pen. And what balanced pension fund wouldn't have some IBM stock in its portfolio?
Bloomberg says the review of IBM kit is ongoing and will eventually land on the desk of president Xi Jinping. Will he twist the knife? Or will president Obama blink? Stay tuned for another exciting episode of “The Snowden Fallout”, here sometime soon on The Vulture Channel. ®