China is weeding out American technology to fulfill its goal of technological self reliance. Local firms in China have now been instructed to stop using cybersecurity from certain companies in the U.S. and Israel citing concerns that Western technology is vulnerable to cyberattacks. Chinese authorities have instructed local firms to stop using cybersecurity software produced by more than 12 companies from the United States and Israel. The decision is due to concerns that Western software could be used to collect and transmit sensitive Chinese data to foreign governments. What cybersecurity companies are banned in China? The list of embargoed U.S. companies includes Broadcom-owned VMware, Palo Alto Networks, and Fortinet. Other major American firms affected are CrowdStrike, SentinelOne, Rapid7, and McAfee. Even Alphabet-owned firms, such as Mandiant and Wiz , are included on the blacklist. The ban also targets some companies from Israel including, Check Point Software Technologies, Orca Security, and Cato Networks. CyberArk, which was recently purchased by Palo Alto Networks, is also on the list. Additionally, Imperva, which is now owned by the French firm Thales, has been restricted. In reaction to the news , Broadcom’s shares dropped by more than 5% during Wednesday trading. Palo Alto Networks saw a decline of about 1%, while Fortinet fell by roughly 2%. CrowdStrike , SentinelOne and Recorded Future clarified that they do business in the country, but other companies like Fortinet operate three offices in mainland China and one in Hong Kong. Broadcom has six locations in China, and Palo Alto Networks has five. Why is China banning cybersecurity firms? China and the U.S. are currently in a period of intense competition for the lead in technological innovation. Beijing has long promoted a policy known as “Xinchuang,” which aims to achieve self-reliance in the technology sector. Chinese officials have also expressed growing concerns that Western equipment is inherently vulnerable to hacking by foreign powers since Western cybersecurity firms frequently allege Chinese state-sponsored hacking. Check Point, for instance, recently published a report about a Chinese operation targeting European government offices. Palo Alto Networks also recently alleged that Chinese hackers were targeting diplomats worldwide. Beijing has consistently denied these allegations. Chinese firms are also being pressured to switch to local providers like 360 Security Technology and Neusoft. The U.S. previously took similar actions against Chinese and Russian firms, banning Russia’s Kaspersky Lab software in 2024. Recently, China has also increased pressure on its state-owned enterprises to stop using Western consulting firms and hardware. Claim your free seat in an exclusive crypto trading community - limited to 1,000 members.
