Gartner: Demand From China's IT Subsidies to Peak This Year

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China's economic stimulus policies aimed at boosting demand for IT products will have their greatest impact on sales this year, research firm Gartner said Friday.

"We predict that stimulus-driven IT spending will reach its highest level in 2010, primarily because most stimulus policy measures and plans were finalized and executed in mid-2009," said Oliver Xu, a principal research analyst at Gartner.

Put in place last year, China's various stimulus packages are worth about $580 billion, and were designed to offset lower overseas demand for Chinese products.

These policies will drive spending on telecommunications gear and computing hardware to $4.5 billion and $4.1 billion this year, respectively, Gartner said. That level of expected spending on IT products will not be affected by signs of economic recovery as the Chinese government is committed to pushing ahead with its stimulus policies, it said.

To what extent foreign companies will benefit from the stimulus programs remains to be seen. Gartner predicted local companies would have an edge over foreign rivals based on their "private connections."

"Overseas-based IT vendors are advised to target the product and service areas in which local competitors cannot perform well," it said.

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