BEIJING • China has green-lit a sweeping and controversial law that may grant Beijing unprecedented access to foreign companies' technology and hamstring their operations in the world's second-largest economy.
The Cyber Security Law was passed by the Standing Committee of the National People's Congress, China's top legislature, and will take effect in June, government officials said yesterday .
Among other things, it requires Internet operators to cooperate with investigations involving crime and national security, and imposes the mandatory testing and certification of computer equipment. Companies must also give government investigators full access to their data if wrong-doing is suspected.
This is a step backwards for innovation in China that won't do much to improve security... 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.
MR JAMES ZIMMERMAN, chairman of the American Chamber of Commerce in China.
Beijing said the law is needed to counter growing threats such as hacking and terrorism, but it triggered concerns among foreign business and rights groups.
Rights advocates said the law will enhance restrictions on China's Internet, already subject to the world's most sophisticated online censorship mechanism.
The one-party state has grown increasingly aggressive about safeguarding its IT systems in the wake of the Edward Snowden revelations about United States spying, and is intent on policing cyberspace as public discourse shifts to online forums.
The fear among foreign companies is that requirements to store data locally and employ only technology deemed "secure" means local firms gain yet another edge over foreign rivals from Microsoft to Cisco Systems.
"This is a step backwards for innovation in China that won't do much to improve security," Mr James Zimmerman, chairman of the American Chamber of Commerce in China, said in a statement.
"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."
Companies operating on Chinese soil rarely raise public objections to domestic policy for fear of repercussions, but much is at stake in a Chinese IT market Gartner values at US$340 billion (S$473 billion). The draft law prompted more than 40 business groups from the US, Europe and Japan to pen a letter to Premier Li Keqiang earlier this year, arguing it would impede foreign entry and the country's own growth.
But Mr Zhao Zeliang, director of the Cyberspace Administration of China's cyber security coordination bureau, told reporters that every article in the law accorded with rules of international trade, and China would not close the door on foreign companies.
"They believe that (phrases such as) 'secure and independent control', 'secure and reliable'... are signs of trade protectionism. That they are synonymous. This is a kind of misunderstanding, a kind of prejudice," he said.
BLOOMBERG, REUTERS, AGENCE FRANCE-PRESSE