China bans iPhone use for government officials at work, Apple's share drops

China has reportedly issued a directive to officials at central government agencies, instructing them not to use Apple iPhones or other foreign-branded devices for work or bring them into the office, as reported by the Wall Street Journal. These instructions were conveyed to staff by their superiors through workplace chat groups or meetings, though the extent of the ban's distribution remains unclear. This move comes just ahead of an anticipated Apple event expected to launch a new line of iPhones, raising concerns among foreign companies operating in China amid escalating Sino-U.S. tensions.

While the report specifically mentions Apple, it doesn't name any other phone manufacturers affected by the ban. Both Apple and China's State Council Information Office, responsible for media queries on behalf of the Chinese government, have not yet responded to requests for comment. This development has led to a 1.5% decrease in Apple's shares in early trading.

China has been working to reduce its dependence on foreign technologies for over a decade, urging state-affiliated firms to transition to local software and promoting domestic semiconductor chip manufacturing. In 2020, Beijing intensified these efforts with the introduction of a "dual circulation" growth model, aiming to decrease reliance on overseas markets and technology due to growing data security concerns.

In May, China called on major state-owned enterprises to play a central role in achieving self-reliance in technology, further heightening the competition amid tensions with the United States. These tensions have been marked by Washington's efforts to block China's access to crucial equipment necessary for its chip industry competitiveness, along with Beijing's restrictions on shipments from prominent U.S. firms such as Boeing and Micron Technology.

This move signals that Beijing is not willing to spare any U.S. company in its pursuit of reducing dependence on American technologies. Even Apple, which has a significant presence in China, could be impacted. Companies are now being urged to diversify their supply chains and customer bases to reduce reliance on China should tensions worsen.

China is a vital market for Apple, generating nearly a fifth of its revenue. While the ban is not expected to have an immediate impact on earnings, given the iPhone's popularity in China, it highlights the challenges faced by American companies in the current climate. U.S. Commerce Secretary Gina Raimondo recently acknowledged that U.S. companies have encountered difficulties in China, making it a less attractive destination for investment due to fines, raids, and other risky business actions.

China's directive to avoid Apple iPhones and foreign-branded devices in government agencies underscores the global tech rivalry, mirroring similar bans in the United States against Chinese companies like Huawei and TikTok. These developments raise concerns for international businesses operating in the midst of geopolitical tensions between two of the world's largest economies.

( Inputs from Rueters)