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China’s latest draft anti-terrorism legislation set to radically alter east/west tech economy

Fri 27 Feb 2015

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China’s latest draft of a controversial new anti-terrorism bill threatens to further deepen the widening rift of mistrust that has been developing lately between China’s technical manufacturing sectors and those of the west. The new iteration of last November’s proposed law – the first anti-terrorism legislation in the world’s second-largest economy – stipulates that non-Chinese tech manufacturers wishing to sell inside the Chinese economy would need to supply the Chinese government with encryption keys for any secure devices, and to install security back-doors that would permit Chinese authorities access to any transactions negotiated by the devices.

The autumn draft from the National People’s Congress already specified that foreign companies operating within China would need to maintain communications records, suppress any content related to terrorism and volunteer any such records to the Chinese authorities.

Reuters quotes a number of (mostly anonymous) sources on industry and insider reaction to the latest draft of the legislation. Most portentously, one unnamed industry source noted: “You are no longer allowed a VPN that’s secure, you are no longer able to transmit financials securely, or to have any corporate secrets. By law, nothing is secure,”

Reuters also reports that Barack Obama’s administration has expressed concern, and attributes this opinion to a ‘US official’.

This week news emerged that China will eschew western technology in favour of nationally manufactured items – manufacturers affected by the decision are among the west’s largest, including Intel, Apple and Citrix. China has already substituted IBM-sourced components in the TianSuo K1 series’ key application mainframe in favour of alternatives from Chinese manufacturer Inspur, and early in 2015 censorship and security issues were rumoured to be behind the failure of Sony to launch its ‘censor-approved’ PlayStation 4 system.

A no-holds-barred economic retrenchment in the technology sector is not an easy option either for the US or for China, which holds $1244.3 billion of the United States’ $18 trillion of national debt or foreign obligation, but recent government surveillance scandals from both sides are putting increasing pressure on economic accord in technology.

Tech giant Xiaomi scuppered a potential deal with Facebook last autumn over China’s fear’s about loss of control over information; in November a study strongly indicated involvement by the Chinese government in hacks against civil rights groups outside the country; in December China continued its ongoing resistance to the rise of the Uber taxi-proxy service by investing $700mn in China-based equivalent Didi Dache; and Chinese mobile behemoth Xiaomi was found to be selling mobile phones to India that relayed data back to China-based servers in Beijing.

So much for our complaints. From the Chinese point-of-view, the continuing revelations from ex-NSA whistleblower Edward Snowden are key to new proposed legislation. Most recently, in what may yet prove the online security story of 2015, it was revealed that the NSA hacked the firmware of hard drives used by six major western computer manufacturers, enabling a deeper and wider-spread level of secret surveillance and spyware diffusion than had previously been thought possible.

With Barack Obama both calling for strong encryption in online technologies and hardware, but simultaneously recommending that such encryption be readable by US authorities – and with David Cameron and a slew of others in the US and the UK echoing these apparently opposing goals on behalf of their respective intelligence agencies – it will be interesting to see how such a fundamental conflict of interests can possibly resolve itself in the next 12-18 months; not least in terms of international trade in networked technologies and hardware.

Tags:

Asia Barack Obama China hacking news politics VPN zero knowledge
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