Chinese officials fear Apple products may be tools for U.S. espionage


Employees and customers cheer during the Apple store opening at Hang Lung Plaza on August 2, 2014 in Wuxi, China. The store is the 12th apple store in mainland China. ( ChinaFotoPress/Getty Images)

BEIJING – Edward Snowden might not be such a popular figure among Chinese officials any more, after it emerged this week that government money won’t be spent on iPads or MacBooks any more because of concerns about U.S. spying.

Snowden’s revelations about widespread U.S. spying on foreign governments took the pressure off China last year, coming only months after Beijing was accused of hacking its way into many American companies.

But not every Chinese official will be so happy with the news, reported by Bloomberg on Wednesday, that 10 Apple products have been removed from a government procurement list released in July because of concerns they might pose a security risk.

Bloomberg reports that smartphones were not part of the procurement list, although iPhones have also been criticized by Chinese state television recently as potentially leading to the theft of state secrets.

It is another piece of bad news for American IT companies. They have come under sustained attack in China since Snowden’s revelations, amid a growing cyberwar between Washington and Beijing.

Apple depended on Greater China for about 16 percent of its $37.4 billion in revenue last quarter, according to data compiled by Bloomberg. IPad sales here increased by 51 percent and Mac sales by 39 percent, Chief Executive Officer Tim Cook said on July 23.

Still if it is any consolation for Cook, long-time rival Microsoft appears to be in even worse trouble.  The company has never earned as much as it should in China because of widespread counterfeiting. Then in May, things started going downhill when the government announced it was banning the use of the Windows 8 operating system on new computers.

Last month, China regulators opened an anti-monopoly investigation into Microsoft, seizing computers and documents from offices in four cities.

Google and Facebook already face censorship or outright exclusion from China, while all four companies have been criticized by state media for allegedly cooperating with U.S. government espionage.

The treatment of IT companies is also part of a broader trend, with many U.S. and European business leaders reporting tougher times in China in recent years.

Some see it as the end of a golden age when they were treated very well in China, and the coming of a harsher era, where they face both closer scrutiny over their operations and discrimination in favor of domestic state-owned companies.

For the Chinese government officials, losing the chance to buy an iPad with government money is probably only a minor inconvenience. And they can perhaps take comfort in the fact that the foreign luxury cars they so covet may soon become cheaper.

China this week conducted raids into offices of Mercedes Benz in China as part of an investigation into whether luxury carmakers were charging too much here, and also said it would punish Audi and Chrysler for monopoly practices, Reuters reported.

Daimler has already announced it plans to cut the price of Mercedes Benz car parts by an average of 15 percent in response to the investigation,  while BMW is also in talks with the Chinese government about cutting prices, Bloomberg said.

Simon Denyer is The Post’s bureau chief in China. He served previously as bureau chief in India and as a Reuters bureau chief in Washington, India and Pakistan.
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