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China's New National Security Law Raises Intellectual Property, Privacy, And Supply Chain Concerns

The New York Times reported about China's new national security law and how it will affect U.S.-based corporations doing business there. The new law also raises intellectual property, privacy, and supply-chain concerns. What is different about the new law:

"New language in the rules calls for a “national security review” of the technology industry — including networking and other products and services — and foreign investment. The law also calls for technology that supports crucial sectors to be “secure and controllable,” a catchphrase that multinationals and industry groups say could be used to force companies to build so-called back doors — which allow third-party access to systems — provide encryption keys or even hand over source code."

MSS Indisde The term "controllable" seems to imply a lot more than access via back doors to software and computing systems. Closely related to this new law are disagreements between the United States and China:

"The United States has accused China of state-sponsored hacking attacks against American companies to gain a commercial advantage... In turn, China maintains that the disclosures by Edward J. Snowden, the former United States National Security Agency contractor, about American online espionage give it plenty of reason to wean itself from foreign technology that may have been tampered with by United States intelligence agencies."

The Ministry of State Security is China's intelligence agency. In April, China withdrew a law that:

"... restricted which technology products could be sold by foreign companies to Chinese banks. Groups that represent companies like Apple, Google and Microsoft had pushed against that law."

Australia's Sydney Morning Herald reported:

"... the Chinese government has enacted a new national security law that amounts to a sweeping command from President Xi Jinping to maintain the primacy of Communist Party rule across all aspects of society. The law is expected to bolster the power of China's domestic security apparatus and military. The law says "security" must be maintained in all fields, from culture to education to cyberspace... security must be defended on international seabeds, in the polar regions and even in outer space."

The Herald added:

"The law is one of three being scrutinised by foreign leaders and corporate executives... The other two laws are expected to be passed soon; one would regulate foreign non-governmental organisations and place them under the oversight of the Ministry of Public Security, and the other is a counterterrorism law... Legal scholars and analysts in China say it will probably lead to the security apparatus amassing more power..."

The U.S. Chamber of Commerce and several companies sent a letter in January 2015 to China calling for more discussions about the new law. The new laws seem to be clear rejection of that request.

NSA Android logo So, there are more security laws to come from China. China's new law raises several questions:

  1. How will high-tech companies respond? Will they comply, fight the new laws, or relocate their businesses to more hospitable countries?
  2. Will Apple permit the Chinese to have back doors or keys to its products after denying that to the U.S. intelligence community?
  3. reportedly, Google has included NSA code in its software. Will it also allow the MSS to include code?
  4. How will IBM, Cisco, Microsoft, and other high-tech companies respond?
  5. Is it possible to technically alter software products and Internet service for only the Chinese market, which aren't sold in other countries?
  6. If #5 is possible, would other countries' governments accept differentiated products, or demand the same backdoor access as China?
  7. How will the new law affect the Internet of Things (ioT); especially including Internet-capable appliances made in China?

NSA Inside logo What are your opinions of China's new security law? Are there any more issues or questions than the seven listed above? How do you think U.S.-based corporations should respond to China's new law?


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