American companies are protesting intrusive new rules requiring them to turn over proprietary data, including computer source codes, that China says are intended to protect its cybersecurity and make it less dependent on foreign technology,
The New York Times reported.
The U.S. Chamber of Commerce and several trade associations have written to Communist Party authorities responsible for cybersecurity, urgently requesting discussions.
For now, the rules — aiming at technology companies selling equipment in China — relate to the banking sector, but they could be expanded to other industries. Handing over the information the Chinese are demanding would compromise intellectual property, security, and might violate United States export law, the Times reported.
The news rules, businesses believe, are intended to force them out of the large and fast-growing Chinese market, the Times said.
The letter said the guidelines would "unnecessarily restrict the ability of Chinese entities to source the most reliable and secure technologies, which are developed in the global supply chain," according to
The Wall Street Journal.
Foreign firms would either have to expose their sensitive hardware and software to Chinese government scrutiny or agree to use Chinese technology altogether, the Times reported.
China has created a separate Internet with its own hardware and software. This means that technology companies that want to tap into the massive Chinese market while also doing business elsewhere would have to design discrete and incompatible technologies for the different markets, according to the Times.
Some see protectionism as the real reason behind the rules, as the Chinese make no secret of their desire to become less dependent on foreign technology. At the same time, they insist they are not trying to drive foreign companies from the market, the Times reported.
From Beijing's point of view it is only doing what the United States has already done on its home turf. Washington has made it impracticable for Huawei, a big Chinese manufacturer of computer servers and mobile phones, to market its equipment in the United States. The U.S. is concerned that Chinese technology could pose "back-door" security threats.
The Chinese maintain they need to be able to access encrypted equipment used in their country to defend against terrorism. Chinese authorities would, for instance, want to have the code to decrypt data stored on the Apple iPhone 6. Apple says its code is designed to be inaccessible even to the manufacturer, the Times reported.
The
iPhone is very popular among Chinese consumers.
A further requirement would be that U.S. companies, including banks doing business in China, store data on servers based in the country, the Times reported.
Implementing any rules against foreign hardware and accessing encrypted software would take time. The banking industry in China relies heavily on mainframe computers made by multinationals, the Times reported.
For now, U.S. companies doing business in China are asking that authorities delay implementing the new policy, the Journal reported.
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