IBM will shut down its research and development department in China, impacting about 1,000 jobs.

The Chinese government has encouraged domestic companies to overtake and push out US tech dominance out of the country in a bid for self-sufficiency in the sector, the Wall Street Journal reported earlier this year.

US tech giants have been looking elsewhere to house their operations as China's efforts to decrease its dependence on the West have increased local market competition. IBM executive Jack Hergenrother says IBM has faced mounting competition in China in recent years.

According to the company's 2023 annual report, released earlier this year, its revenue in China dropped 19.6 per cent last year.

In a statement the every shrinking Blue said it was shifting its R&D operations to other overseas facilities.

"IBM adapts its operations as needed to serve our clients best, and these changes will not impact our ability to support clients across Greater China region," an IBM spokesperson said.

In May, the Wall Street Journal reported that Microsoft asked hundreds of its employees in China to consider relocating to another country as the company sought to reduce its cloud-computing and AI research operations in China.

US venture capital firms have also begun pulling back from investing in Chinese start-ups.