Monday 13 April, 2015

China’s Controversial New Cybersecurity Rules and How They Might Hurt US Businesses

US President Barack Obama has given China some stern words over its new cybersecurity rules, which the US says are overly restrictive and may limit American businesses’ access to the Chinese market. They say these rules could cost US businesses billions. China, however, probably isn’t shaking too badly in its boots considering that the US depends so much on China.

Total Surveillance Power

The new rules apply to overseas companies that supply computer equipment to financial companies and institutions in China, particularly banks. The rules require the seller to provide secret source code, submit to invasive audits, and build back doors into their hardware and software to give Beijing total surveillance power.

Some tech companies say that this would effectively shut them out of the Chinese market. This is troubling for companies like Apple, which has recently become the biggest smartphone seller in China.

The new regulations, which were announced by the China Banking Regulatory Commission and Ministry of Industry and Information Technology, are officially called “guiding opinions”; in other words, they’re more like recommendations. They include all kinds of equipment used by banks such as terminals, ATMs and smartcard readers. These regulations haven’t been published in full and are expected to be part of new antiterrorism regulations that will be publicized sometime in mid-2015.

The Free Market Runs to the Evil Tyrannical Government for Help

The announcement of these new rules have sent companies in the US and Europe, including those that tout the virtues of the “free market,” running to their governments for help in the matter.

The Wall Street Journal published an open letter to the US government from a group of businesses that said, “(We) request your immediate action to work with Chinese officials to reverse an alarming number of troubling, new Chinese government policies impacting the information and communications technology (ICT) sector.”

Spy versus Spy

Right now, we’re in the midst of serious tension between the US and China, both of which accuse the other of spying on them. The disclosures by Edward Snowden and other leaks regarding the US spying on foreign governments haven’t helped this. It’s no wonder China wants to keep control over any US technology is uses.

Although the business community may cast Chinese policies as stubbornly protectionist, the Middle Kingdom isn’t the only country that’s shying away from using US products in the wake of the spying revelations. Even some of its closest allies are looking elsewhere for technology it once bought from the US.

In a news briefing regarding the regulations, China’s Foreign Ministry spokesman Hua Chunying said, “All countries are paying attention to and taking measures to safeguard their own information security. This is beyond reproach.”

Bob Steele

Bob Steele is an entrepreneur, software developer, marketer, and author living in the Denver metropolitan area. He’s an avid outdoorsman who loves skiing, hiking, fishing, boating, and just plain having fun. His interests include games, space, technology, physics, cooking (well eating actually), economics, business, internationalism, and team sports. With over thirty years of professional consulting experience, Bob has been exposed to many diverse business models and has gained a sensible approach to life. Bob’s company, WaveCentric is focused on commerce, marketing, and entertainment related products.

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