International Business Machines (IBM) Corp. is shutting down a key research division in China.
The media of the mentioned Asian country reports that the specified decision of the technology company based in the US state of New York will affect more than 1,000 employees. IBM is currently completing its active engagement with the world’s second-largest economy.
The company is shuttering two business lines that specialize in research, development, and testing. In the foreseeable future, IBM will focus on serving private enterprises and selected multinational corporations that operate in China. The relevant information was made public by the media.
It is worth noting that currently many foreign companies are ending their activities in China or reducing the scale of their presence in the Asian country. The corresponding tendency is related to several factors. The main reasons for the decrease in the involvement of foreign companies in activities in China are the slowdown in economic growth in the Asian country, increased control by local regulators, and Beijing’s desire to develop the domestic technology sector as a kind of government priority.
Wall Street companies such as Morgan Stanley have already shifted some of their operations outside of China. Against the background of such actions, there is currently a decrease in the volume of foreign investment in the Asian country. Foreign companies explain the mentioned dynamic by concerns related to the fact that Beijing prefers local players.
The technology sector has already become a kind of space of confrontation between the United States and China. The US government has restricted the export of advanced chips and equipment for the production of microcircuits of the appropriate category to an Asian country. Policymakers in Washington explain this decision for national security reasons, arguing that Beijing can use cut-edge chips to enhance its military capabilities. China characterizes the actions of the United States as violating the principles of free international trade.
Currently, Beijing, as it was mentioned above, is striving to develop the domestic technology sector. Against the background of growing geopolitical tensions, this aspiration is logical. Beijing is not unreasonably concerned that restricting access to advanced technologies will negatively affect its economic prospects and position in the international political arena.
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