China's vague cybersecurity law has foreign businesses guessing

China has approved a cybersecurity law that many foreign companies have opposed

The most disturbing thing for foreign businesses facing China's new cybersecurity law may just be how vague and broad it is.

Under the new law, adopted on Monday and taking effect next June, it's possible that any major company working in the country might be subject to "security reviews" from the Chinese government.

Any company involved in telecommunications, information services, finance or any sector "where the loss of data can harm the country's security" is subject to a possible review. But what these security reviews actually entail isn't clear in the law.

That vagueness has foreign companies worried. Many have opposed the legislation on the grounds that it would limit their ability to do business in the country.

"We believe this is a step backwards for innovation in China that won’t do much to improve security," said James Zimmerman, chairman of the American Chamber of Commerce in China, in a statement on Monday.

Fears of Chinese protectionism are nothing new. The country historically has tried to support domestic businesses over foreign ones. But China has been taking a stronger stance on cybersecurity since the 2013 revelations by noted leaked Edward Snowden about secret U.S. surveillance programs.

One of those programs allegedly spied on the Chinese government and companies including networking equipment provider Huawei Technologies.

On Monday, Chinese state media touted the new law as necessary to protect the country's critical infrastructure and its citizens' personal data. "Without internet security, there is no security for the nation," said the Xinhua News Agency.

However, the new law has drawn complaints from more than 40 foreign business associations. A key concern is with the Chinese government-mandated security reviews and whether foreign tech companies will need to hand over sensitive intellectual property, such as a product's source code.

"The law doesn't say you must reveal the source code," said an industry source at one lobbying group. "However, we are concerned that this could end up being the result."

Although the law is meant to promote cybersecurity, it's also designed to favor Chinese businesses, he said.

"We think there will be less of a level playing field for foreign companies -- that's the fear," the industry source said. "I would say the level of concern is quite high."

China has already shown interest in gaining access to source code from foreign companies. Earlier this year, a lawyer for Apple said the government had asked for such access but the company refused.

China also recently considered regulations for banking providers that would have required they hand over source code and encryption keys. However, it later halted implemention of the rules.

The law announced Monday may be vague, but that's usually the case with Chinese regulations, said Adam Segal, an expert on China with the Council on Foreign Relations. "Ministries and provinces in the country will interpret the laws differently, until they're called out by the central government," he said.

Segal doesn't expect any foreign businesses to leave China because of the new law. But any demand to see a company's source code or encryption keys would force that company to make a hard choice.

"A lot of firms are really starting to draw a line and would be unwilling to share that," he said. "But if other companies do, and there are defections, then that will make the pressure to share more intense."

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Michael Kan

IDG News Service
Show Comments

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

David Coyle

Brother PocketJet PJ-773 A4 Portable Thermal Printer

I rate the printer as a 5 out of 5 stars as it has been able to fit seamlessly into my busy and mobile lifestyle.

Kurt Hegetschweiler

Brother PocketJet PJ-773 A4 Portable Thermal Printer

It’s perfect for mobile workers. Just take it out — it’s small enough to sit anywhere — turn it on, load a sheet of paper, and start printing.

Matthew Stivala

HP OfficeJet 250 Mobile Printer

The HP OfficeJet 250 Mobile Printer is a great device that fits perfectly into my fast paced and mobile lifestyle. My first impression of the printer itself was how incredibly compact and sleek the device was.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?