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China tightens grip on big data

 

The Chinese government began enforcing its new cybersecurity law governing data collection on Thursday, as foreign companies brace for the impact it could have on their businesses.

The new law’s essential features are requirements that companies store collected customer information within China and that approval must be granted before transmitting that data out of the country. The law has drawn opposition worldwide over concerns that it could become a hindrance to the global use of data, which companies rely on to steer their business strategies. Negotiations with the U.S. over the practical application of the law are likely to continue.

Countries around the world are moving to establish laws and regulations to deal with the rising tide of global cyberattacks. China, which has built its own internet space after shutting out companies like Google that do not pass its censors, is also joining this effort.

The new cybersecurity law was passed in November by the Standing Committee of the National People’s Congress. The aim is to enhance the security of the internet and data in response to the growing number of companies that collect and analyze customer data to form business strategies or provide services.

The law is intended to serve as the basic legal foundation for all cybersecurity legislation and requires that companies adopt technological standards based on Chinese law when building a network or providing services. Regulations based on the new law will be determined and applied going forward.

As leaders in areas such as cloud computing, American companies are concerned about the law. Some foreign companies have already begun to switch management of their systems and data analysis from cloud technology leader Amazon to China’s Alibaba group, according to one foreign law firm, leading many to believe that the new law will be to the advantage of Chinese companies.

Costs could also rise for companies since they will have to establish independent data systems in China. An executive at a U.S. household goods maker complained that although it employs data from around the world to develop products, its Chinese data will no longer be integrated. Security and operational information could leak, an executive from a major infrastructure firm warned.

“Our concerns encompass enormously consequential issues for China’s economy, its relations with economic and commercial partners and the global economy,” warned a 54-member global corporate group in a May 15 letter to Chinese authorities. It mainly consists of members from the U.S.-China Business Council, an organization of American companies that do business in China. European and Japanese companies have also expressed a similar sentiment.

European, Korean, Japanese and U.S. companies asked that the enforcement of the law be postponed, but ultimately that did not materialize. Discussions over the law’s regulations are expected soon between Chinese authorities and foreign companies. If such negotiations prove difficult, economic conflict could develop between China and the U.S.

“No internet safety means no national security,” said Chinese President Xi Jinping, who has proceeded with tightening his control over the internet. Antiterrorism laws require that decryption be provided for communications. The government also requires that internet broadcasts undergo advance screening. In early 2017, regulations on virtual private networks used by companies and others were tightened, and in May tougher regulations governing media that deliver news via the internet were announced.

Public safety systems were among  the targets in China of a global cyberattack that took place in mid-May, leading to more voices within China demanding that the country have its own cybersecurity mechanisms. China is likely to continue its hard line on internet controls as Xi and his circle prepare  the leadership shakeups to take place during the Communist Party’s National Congress this autumn.

This article was originally published on asia.nikkei.com and can be viewed in full

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