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New Cyber Law in China to Create Problems for Foreign as well as Domestic Firms

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Published on : Jul 13, 2015

On July 8, China introduced a new law on cyber security which has allowed the communist government to tighten its grip on the technology and internet industries. The law covers a wide range of sectors- from politics to personal data, and is expected to prove disadvantageous to the foreign technology firms operating in the country. Already, the Chinese government is trying to reduce its dependence on the foreign technology firms. The new law will put the foreign tech firms in difficult position. But the law will have its negative impact on the domestic technology sector as well.

The law is said to be safeguarding the national security and domestic cyber industry. The government further plans to increase censorship, control of information, and restrict free flow of information. The law has mandated the technology companies and the internet service providers to store data physically so that the government can track down any threat. The law also allows authorities to cut area-wide internet access to maintain order. 

According to Joerg Wuttke, the president of the European Union Chamber of Commerce in China, it has not been clarified yet that how the new cyber law will get implemented. However, industry analysts have pointed out that the law might prove fruitful to the domestic technology firms. The foreign firms are less likely to handover the source code or design of their software programs and the law will negatively affect their business in the country. The U.S. had blamed Beijing backing the cyber-attacks on foreign governments and organizations, the most recent being the data theft from the U.S. Office of Personnel Management. The communist regime in China, fearing that the U.S. is spying in the country, removed American technology firms such as Apple, Cisco Systems, and Citrix Systems from the list of approved Chinese vendors. 

Industry analysts have mentioned that the new law will affect the country’s domestic startup sector where technology research would be slowed down.