China’s New Cyber Security Regulation

China’s New Cyber Security Regulation

China has a variety of reasons to ensure that “The Great Firewall”, a term erected to describe its stringent internet access controls, stays as solid as the monumental Great Wall of China. Pew Research Center’s survey in 2009 reported that 80 percent of all Chinese think a controlled internet is for their benefit, while 85 percent want the government to control it as part of its responsibility.

The laws enacted over the past decade affect international firms, especially those headquartered and ran from the United States. Microsoft, Amazon, Facebook, Google, and Apple have faced repeated calls for monitoring of their activities inside China, while many of the services such as Google Play store and search and Microsoft Windows products find it hard to penetrate the Chinese market.

But why would China ever think of giving these foreign companies access? Its own home-grown businesses such as Alibaba, and its affiliated companies social messaging giant Weibo and WeChat, and search giant Baidu are more than adequate for more than 700 million internet users in China.

This Great Firewall China uses to enforce its cyber security also serves as a geopolitical tool.  It’s a lesson for foreign governments who also increasingly use covert surveillance to monitor online traffic in the name of cybersecurity. However, for foreign firms, it affects their ability to conduct business. In 2016, the American Chamber of Commerce in China reported that 4 out of 5 of its members were negatively affected by this “Golden Shield”. The best way to look at it is through the ban on Apple services such as iTunes Movies and iBooks that got blocked in China within six months of their inception. Apple had invested $1 billion in this venture. France-based media watchdog Freedom House in 2016, has ranked China last for the second consecutive year in relation to freedom of the press too due to The Communist Party’s tight grip on the media.

China's New Cybersecurity Regulation

China uses the pretext of whistleblower Edward J. Snowden’s claims that the US illegally collects information on foreign citizens, as a basis to tightening controls at home. The most recent Cybersecurity Law implemented which came into effect on June 1, makes it even harder for foreign firms to operate. As reported by the Financial Times, it gives local Chinese businesses a clear advantage over their foreign counterparts. Carly Ramsey, an associate director at a risk-management consultancy Control Risks said, “The law is both extremely vague and exceptionally wide in scope, potentially putting companies at risk of regulatory enforcement that is not related to cybersecurity.”

While talking to the Financial Times, a lawyer at Simmons & Simmons in Shanghai, Xun Yang said, “The message is clear that the government will encourage a domestic development of technology, and that it now sees privacy and cybersecurity as vital national concerns.” As explained by The Diplomat, China thinks that it currently does not follow any legal codes on controlling data like its European and North American counterparts do. It is more evident in the Article 37 of the new Cybersecurity Law, where China will invest in technology to keep export of technological and privacy data to the minimum and will ask all local and foreign companies to save their data in mainland China.

Many businesses rely on Big Data gathered on users (e.g. date of birth, addresses, phone numbers, and identity card numbers) to provide their users with targeted services through data patterns detected through unstructured learning. China views this as a problem and potentially a source of weakness in its national security, especially if this vital data is held in foreign hands.

To ease concern, many foreign firms who have data centers abroad might now be required to seek special permissions if they are part of one of China’s critical sectors. These include power, communications, transportation, and banking. All firms within these critical sectors much grant the Chinese government unrestricted backdoor access when needed. Though cyber security is an increasingly important issue globally, critics claim China’s pretext of protecting itself is a subterfuge. Many believe the new regulation’s true intention is to lessen what it perceives as the growing influence of the West in its sovereign nation.

 

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