The market is too valuable for these new rules to drive away most comers
Starting June 2017, China will enact new cyber security legislation governing internet use, especially with foreign operators in mind. Though the new law mainly codifies existing arrangements, it is still raising concern among these foreign entities, as well as human rights groups, due to the vagueness surrounding some key articles, like just what constitutes “technical support” or how security reviews will be carried out.
Foreign businesses operation in China are very concerned that the new legislation will require them to disclose proprietary data about how their systems work in order to pass inspections. It is not clear if, or how, this would be accomplished based on what is in the present text.
Chinese officials denied that there were any ulterior motives to gain access to the architecture of these databases, telling Reuters that talk otherwise was, “a kind of misunderstanding, a kind of prejudice.”
One that that has been more clearly delineated is data storage, in Article 37: “Personal information and other important data gathered or produced by critical information infrastructure operators during operations within the mainland territory of the People’s Republic of China, shall store it within mainland China.” This is at least a step down from earlier wording that spoke even more broadly about what constituted “critical information infrastructure.”
The government now says (Article 66) it will be illegal to store or share this information elsewhere without going through a review process, and failure to do so would result in service suspensions, among other penalties.
As part of a wider crackdown on social media anonymity, the legislation further advances the government drive to have all accounts registered using real, verifiable biographical data. (This is coupled with further blacklists for “obscene” content.) The government’s goal is, reports Net Alert, “that telecommunications service providers are required to verify all their phone users’ identity by end of 2016.” Of course, that data will be heavily monitored, both by official organs as well as companies that are, naturally and regardless of nationality, looking to maximize targeted data collection for advertising purposes.
Domestically, Chinese developers and companies have to either come up with workarounds to the “Great Firewall,” or they cannot gain access to necessary resources to stay abreast of global trends. Still, with most Western companies eager to retain access to the Chinese market and work with local developers, they are already meeting similar such requirements by partnering with local entities. Apple, Qualcomm, Cisco, and Microsoft, according to The Wall Street Journal, are already far along in this respect. They began seeking these joint ventures in light of cyber security legislation introduced in 2015, as those regulations explicitly made clear that foreign firms coming into the financial sector would have to turn over proprietary data and build backdoors.
Social media situation
Although China has an already well-developed censorship system, it will be worth watching for further modifications to these laws now that state media is pointing to the hand-wringing over the epidemic of fake news in freer internet societies as proof that more “internet management” is needed.
Interestingly, it seems Facebook agrees to some extent with this assessment, with The New York Times reporting the company has secretly been developing a censorship tool to pass onto a third party, probably a state office, in China in order to meet the censors’ anticipated demands to block all controversial news, not just take down flagged content per standard policy of responding to requests after the fact.
Facebook, as well as Google, which also left China several years ago over censorship and money troubles, have to weigh the value of getting back inside with the fact that they’d be stripping down the potentially politically troublesome aspects of their offerings to focus instead on e-commerce and entertainment, as Chinese companies have done themselves, namely, WeChat and Weibo.