There was quite a kerfuffle late last year when a US congressional panel warned that the Chinese government might be using hardware from manufacturers like Huawei and ZTE to spy on government agencies and other institutions.

The Chinese angrily denied the accusations, but by then the damage to its reputation had already been done, leading to moves by Canada and others to ban the hardware. Now it’s the turn of the US itself, which has just signed into law new rules that restrict the purchase of Chinese-made computer equipment.

In what is the first real sign of retaliation by the US over China’s questionable cyber-spying activities, a new bill signed into law on Tuesday bars government agencies from purchasing any computer hardware from firms linked to the People’s Republic.

Called the Consolidated and Further Continuing Appropriations Act of 2013, the bill only covers spending on non-defense matters, and is only valid until September 30 of this year. Even so, the new law could well be a sign of harsher measures to come.

The crucial passage – Section 516 – states that the National Science Foundation, NASA and the Commerce and Justice departments are all barred from buying IT systems that have been “produced, manufactured or assembled” by companies “owned, operated or subsidized” in any way by the Chinese. The only exceptions to this rule are for hardware that is deemed to be in the interests of national security, or if the FBI decides that a component’s acquisition does not carry any risk of “cyber-espionage or sabotage”, reports AP.

Lenovo’s PC Business Heading For A Brick Wall?

The bill has the potential to do serious harm to the interests of Huawei, ZTE and also Lenovo, which is currently trying to grow its PC business in the US. In two blog posts (here and here) written by lawyer Stewart A. Baker, a former assistant secretary of the Department of Homeland Security, the ramifications of the bill are outlined in full detail.

What’s particularly interesting is the potential impact the bill could have on Lenovo’s sales. Now Lenovo has so far emerged unscathed from all the furor surrounding all of the China cyber-espionage and hacking scandals, steadily growing its PC business even as the likes of HP and Dell struggle to cope with a Post-PC world.

But now Lenovo faces a big problem. As noted by TechCrunch, the Chinese gadget maker is a major supplier for agencies like NASA, the Departments of Energy and State, and NASA (which only allows ThinkPads to be used on the International Space Station). In addition, much of Lenovo’s US growth is taking place in schools and local government offices, all of whom are now barred from buying their equipment.

There will likely be much wider implications too, although how far it goes will depend on how strictly the new bill is interpreted. Lest we forget, the nature of the IT supply chain is so globalized these days that it might be almost impossible for agencies to strictly adhere to Section 516. It’s a safe bet that the majority of US technology companies have some, if not all of their components produced by foreign manufacturing firms, and the vast majority of these plants can be found in China.

If the government enforces the bill to the letter, then this is going to cause some major headaches with agencies being forced to carefully research each and every purchase to ensure there’s no ‘Chinese connection’, while many US firms might deem it necessary to find alternative, non-Chinese suppliers.