China puts cybersecurity squeeze on US technology companie

US business lobbies have responded with alarm after China’s government moved to force American companies selling technology to Chinese banks to hand over their software secrets and adopt encryption algorithms dictated by Beijing.

China has demanded access to the software code and control over the security measures of American companies selling technology to Chinese banks. Photograph: Markus Brunner/Getty

The American Chamber of Commerce in China and 17 similar US business groups have called for “urgent discussions” with the Chinese government over the new cybersecurity regulations and urged Beijing to postpone the implementation of the new policies.

In a letter to China’s top cybersecurity policy group dated 28 January, they said the new rules would require “intrusive” security testing and the disclosure of sensitive intellectual property.

Cybersecurity has been a significant irritant in US-China ties, with both sides trading accusations of abuses. US vendors;8 such as Cisco and Microsoft are facing increased pressure from Chinese authorities to accept rigorous security checks before their products may be purchased by China’s sprawling state-run financial institutions.

Beijing has considered its reliance on foreign technology a national security weakness, particularly following former National Security Agency contractor Edward Snowden’s revelations that US spy agencies planted code in American-made software to snoop on overseas targets.

In the letter addressed to the China’s Central Leading Small Group for Cyberspace Affairs – led personally by President Xi Jinping – the American business groups warned that an “overly broad, opaque, discriminatory approach to cybersecurity policy” would harm China’s economic growth.

“The domestic purchasing and related requirements proposed recently for China’s banking sector … would unnecessarily restrict the ability of Chinese entities to source the most reliable and secure technologies, which are developed in the global supply chain.”

The cyberspace policy group approved a 22-page document in late 2014 that contained the heightened procurement rules for tech vendors, the New York Times reported on Thursday.

Source code – the usually tightly guarded commands that create programmes – for most computing and networking equipment would have to be turned over to officials, according to the new regulations.

Firms planning to sell computer equipment to Chinese banks would have to set up research and development centres in the country, get permits for workers servicing technology equipment and build “ports” that enable Chinese officials to manage and monitor data processed by their hardware.

Material from Reuters was used in this report

Source: The Guardian