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China To Require Review Of Computer Security Technology

Posted on: Monday, 8 December 2008, 14:56 CST

Chinese government officials have announced a new plan that will insist upon all imported computer security technology to be reviewed by the government before being admitted into the country.

Set to launch May 1, the new regulations will cover 13 types of hardware and software, including database and network security systems, secure routers, data backup and recovery systems and anti-spam and anti-hacking software.

Beijing, which has tried in the past to force companies to reveal how encryption systems work, says regulators will have the power to reject foreign technologies, which could help to promote sales of Chinese alternatives.

Washington argues that the new rules might slow imports in a market dominated by U.S. companies.

"There are still opportunities to defuse this, but it is getting down to the wire," said Duncan Clark, managing director of BDA China Ltd., a Beijing technology consulting firm. "It affects trade. It's potentially really wide-scale."

Yin Changlai, the head of a Chinese business group sanctioned by the government, has acknowledged that the rules are meant to help develop China's infant computer security industry by shielding companies from foreign rivals that he said control 70 percent of the market.

But that might disrupt foreign manufacturing, research or data processing in China if companies have to switch technologies or move operations to other countries to avoid the controls.

"I think there's both a national security goal and an industrial policy goal to this," said Scott Kennedy, an Indiana University professor who studies government-business relations in China.

"I'm sure before they came out with this, there was a discussion with industry and industry probably was giving them lots of requests about what should be included."

The new rules will be enforced by the China Certification and Accreditation Administration, which said they are meant to protect national security and "advance industry development."

China has one of the largest technology markets, with more than 253 million Internet users and 590 million mobile phone accounts. It has tried to leverage that to promote its high-tech industries, which lag foreign competitors.

In 2001, Beijing tried to require computer and software suppliers to disclose how their encryption systems worked. That was scrapped after companies said the demand was too broad and trade secrets might fall into the hands of Chinese competitors.

Source: redOrbit Staff & Wire Reports

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