China pushing banks to drop IBM servers in hacking dispute: report

Tue May 27, 2014 5:21pm EDT

A paramilitary policeman stands guard under flags outside the Great Hall of the People during the third plenary session of the National People's Congress (NPC) in Beijing March 10, 2013. REUTERS/Petar Kujundzic

A paramilitary policeman stands guard under flags outside the Great Hall of the People during the third plenary session of the National People's Congress (NPC) in Beijing March 10, 2013.

Credit: Reuters/Petar Kujundzic

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(Reuters) - China is pressuring its banks to remove high-end servers made by IBM IBM.N and replace them with a local brand, Bloomberg reported on Tuesday, as tensions rise between Beijing and Washington over allegations of cyber espionage.

A spokesman for International Business Machines Corp said the U.S. technology company was not aware of any such demands by the Chinese government.

"IBM is not aware of any Chinese government policy recommending against the use of IBM servers within the country's banking industry," said IBM spokesman Ian Colley. "IBM is a trusted partner in China and has been for more than 30 years."

The Bloomberg report, which cited anonymous sources, comes a week after the U.S. Justice Department charged five Chinese military officers, accusing them of hacking American companies to steal trade secrets.

China on Monday accused the United States of "unscrupulous" cyber surveillance that included large-scale computer attacks against the Chinese government and Chinese companies. China has also told state-owned enterprises to sever links with U.S. consulting firms, The Financial Times reported on Sunday.

The Bloomberg report said Chinese government agencies including the People's Bank of China CNBNK.UL and the Ministry of Finance are reviewing whether Chinese commercial banks' reliance on the IBM servers compromised the country's financial security. (r.reuters.com/dyf69v)

The results of the review will be submitted to a working group on Internet security chaired by Chinese President Xi Jinping, according to Bloomberg.

The U.S. State Department said the Justice Department's hacking charges, announced on May 19, relate to a law enforcement investigation.

"It doesn't provide, in our view, any justification for retaliation against U.S. businesses or the U.S. government," said State Department spokeswoman Jen Psaki.

"We continue to believe that a dialogue about cyber-related issues and concerns we have, and certainly concerns they have, is the best path forward," she said, referring to the Chinese government.

The Chinese central bank and finance ministry did not immediately respond to requests for comment. A spokesman at China's National Development and Reform Commission said the country's top economic planner has not told companies to change their IBM servers, nor received orders from higher levels of the government to do so.

Sources at China's "big four" state-owned banks said they had no knowledge of pressure for a technology change, saying any replacement of such systems would not be an easy task.

"We haven't heard about the order," an official at one of the bank's IT department said, declining to be identified because he was not allowed to speak to the media.

"There aren't any locally made hardware around that can handle the massive amount of data in the banking industry."

Over the weekend a U.S. official told Reuters the government was looking at a number of measures to curb Chinese cyber espionage, including visa restrictions to prevent Chinese nationals from attending hacker conferences in the United States this summer.

(Reporting by Xie Heng, Kang Xize, Koh Gui Qing and Aileen Wang in Beijing, Bi Xiaowen in Hong Kong and Arnab Sen in Bangalore; Writing by Kazunori Takada; Editing by Gopakumar Warrier and Kenneth Maxwell)

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Comments (4)
UauS wrote:
That’s a news that everyone talks but no one heard about… So much for communist China “capitalism”.

May 27, 2014 11:08am EDT  --  Report as abuse
tmc wrote:
The cyber wars are just barely beginning…

May 27, 2014 1:22pm EDT  --  Report as abuse
blah77 wrote:
Wouldn’t surprise me if some US government agency is spying on these Chinese state owned banks. After all, these huge financial institutions do not share financial data with the US, including information on accounts of expats or green card holders which the IRS is so keen on taxing.

More importantly, having access to the confidential data of these large state-owned banks would allow the US to have an inside look on the currency trading habits of the RMB such as volume, source, frequency, so on and so forth. Basically all of the information which drives daily fluctuations of the RMB. That in turn will allow the US to manipulate the RMB pricing even within its narrow daily band.

May 27, 2014 5:15pm EDT  --  Report as abuse
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