China adopted a new controversial cyber security law on Monday to tackle increasing cyber terrorism and protect leakage of government information.
The law was legislated by the Standing Committee of National People’s Congress and it will take effect from June 2017. The new law states that it will, “monitor, defend and handle cyber security risks and threats originating from within the country or overseas sources, protecting key information infrastructure from attack, intrusion, disturbance and damage” according to PTI.
The aggressive safeguarding has led to rising concerns among foreign companies and financial firms. Overseas market analysts and critics say that it may lead to the shutdown of many companies due to limitation of online activity under critical cyber law enforcement.
Though foreign companies operating in China rarely show any opposition when it comes to domestic laws and policies, but 40 business firms from the U.S., Europe and Japan have written a letter to Premier Li Keqiang saying that the law will hinder entry of foreign companies and affect the country’s economy.
The foreign investors fear that the requirement to store company data locally and use software approved by government officials as “secure” would cut down performance. In such a case local firms will gain an edge over their foreign counterpart rivals.
“This is a step backwards for innovation in China that won’t do much to improve security,” James Zimmerman, chairman of the American Chamber of Commerce in China, said in an e-mailed statement after the law was passed. He added,” The Chinese government is right in wanting to ensure the security of digital systems and information here, but this law doesn’t achieve that. What it does do is create barriers to trade and innovation.”
Not only technology companies but business depending on their products and systems are highly concerned. The new law requires them to submit highly sensitive source codes andencryptions for review. Handing over critical intellectual property is a big concern for the firms,though companies like Microsoft have a conditional understanding on this matter.
“The law fits international trade protocol and its purpose is to safeguard national security,” said Zhao Zeliang, director-general of the bureau of cybersecurity. “China’s cyber security requirements are not being used as a trade barrier,”according to Bloomberg.
With a rise in the number of layers of firewall,the fortification process has created a stir in the Chinese market which already has a highly sophisticated cyber security structure compared to other nations. Companies are hoping for a review of the policies .