Chinese and US flags. Photo: VCG

US software development platform GitHub plans to set up a subsidiary in China to continue serving Chinese developers amid tightening US export controls. Analysts said China is a market US technology companies can't lose and the move is a response to the uncertainty caused by the China-US trade war.

Ma Jihua, a veteran industry analyst, said that Washington's policies on trade with China have gone back and forth, which businesses cannot afford.

"Faced with the uncertainty caused by the trade war between China and the US, companies from all over the world, especially US companies, are responding to the tension with long-term preparations to avoid potential risks," Ma told the Global Times on Wednesday.

GitHub plans to establish a wholly owned subsidiary in China as the first step, in a "phased approach," and later it will explore joint ventures and the possibility of hosting GitHub content in China, said Erica Brescia, chief operating officer of the world's biggest software development platform GitHub, during an interview with the Financial Times on Monday.

Brescia said that China was "very encouraging" of the phased plan and the company would lobby US regulators to prevent the expansion of export controls.

"The most important purpose of GitHub setting up a subsidiary in China is that the company cannot lose the Chinese market and its profits, and maintain sustainable development amid the contradictory trends of globalization and trade protectionism," Ma noted.

China has become the second most important market for GitHub in terms of the number of developers after the US, and the market is growing rapidly, according to GitHub's Octoverse report for 2019. The rate of forking and cloning open source use on GitHub by Chinese developers increased 48 percent in 2019.

"China is a very competitive market for companies, because technology products are quickly updated. If the leading companies in the industry don't compete in the Chinese market and share information and ideas about the competition, there are risks for the long-term development of those companies," Tian Yun, vice director of the Beijing Economic Operation Association, told the Global Times on Wednesday.

China is home to an increasing number of software contributors as 31 percent of Asia's total 4 million contributors called China home in 2019, according to the report.

Chinese technology giants including Alibaba, Baidu and Tencent are developing open source code, which are future competitors of GitHub in the second-largest market. 

GitHub was acquired by Microsoft in October 2018 and remained an open platform. Industry insiders said the merger will make both more competitive in the open source field to better face market competition.

"While the US is launching a global trend of trade protectionism, China is opening its market further to foreign investors," said Tian, adding that the Foreign Investment Law is giving confidence and security to foreign companies, and the law is the reason that GitHub will set up a wholly foreign-owned subsidiary in China.