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TheStreet Open House

China Wants Banks To Stop Using IBM Servers

Stocks in this article: IBMMSFT

NEW YORK (TheStreet) -- The Chinese government has reportedly asked local banks to stop using computer servers manufactured by IBM (IBM) and has also warned state-owned companies to stop depending on American consulting companies.

These reported moves began after U.S. prosecutors charged five Chinese army officers with computer spying, last week. China immediately responded by releasing the results of a report from its Internet Media Research Center showing its military, businesses and personal cellular phone traffic were targets of U.S. spying. Those results were based on information provided by whistle-blower Edward Snowden.

In a statement to Britain's The Guardian the Chinese government accuses the US of breaking international law: "The United States' spying operations have gone far beyond the legal rationale of 'anti-terrorism' and have exposed its ugly face of pursuing self-interest in complete disregard of moral integrity."

Last week China ordered operators of government computers to stop using Microsoft's (MSFT) Windows 8 operating system. According to a new Bloomberg story the Chinese officials are said to be reviewing whether reliance on high-end IBM servers compromises that country's financial security.

Although the policy has not been formally announced by the Chinese government unnamed sources believe the People's Bank of China and the Chinese Ministry of Finance have begun asking banks to remove IBM servers from their businesses and begin a "trial period" of replacing them with locally branded computers.

Additional fallout from the current spy war is spreading in other directions. According to the Financial Times, reports the Chinese government to stop hiring US consulting firms. The government's rationale is that consultants might be sending corporate secrets back to US officials. The Chinese government hasn't specified which consultants it might be targeting. A number of Wall Street investment banks consult to government and private clients.

The U.S. government doesn't seem to be backing down. The BBC adds that over the weekend a senior US administration official suggested that this country should consider visa restrictions for accused Chinese hackers to keep them from attending like-minded hacker gatherings such as Def Con and the yearly Black Hat conference in Las Vegas.

IBM stock was gaining 0.08% to $186.08 in early Tuesday trading in New York.

-- Written by Gary Krakow in New York.

To submit a news tip, send an email to tips@thestreet.com.

Gary Krakow is TheStreet's Senior Technology Correspondent.

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