Virginia Rometty was speaking in Beijing at a government sponsored conference, according to Reuters.
She said that a country of over one billion people needed its own IT industry and it was unfair of foreign multinationals just to milk the market or use it as a place to manufacture kit.
Many foreign companies have made successful businesses in China by taking a partner in the country – the government makes this something of a condition in order to trade there.
The report said that IBM would let local companies build servers using the Power chip and also use the software for the mainframes.
The first beneficiary of the deal is a Chinese firm called Suzhou Powercore, which will manufacture the Power chips for home grown servers.
Rometty didn’t appear to speak of human rights in China, which remain an obstacle for other firms.