China Anti-Terror Law Raises Practical Concerns: Europe Chamber

  • Vague wording leaves companies unclear about implementation
  • Law is seen as helping reduce a reliance on foreign tech

The vague wording of China’s new counter-terrorism law raises concerns about how telecommunications carriers and network service providers will be expected to implement the regulations in practice, the European Chamber of Commerce in China said on Tuesday.

The law, approved by the legislature this week and effective from Jan. 1, requires technology companies to assist authorities by providing encryption keys -- a condition that’s sparked U.S. criticism it could disadvantage foreign players.

While the new law dropped requirements in earlier drafts for technology companies to submit encryption codes and other sensitive data for pre-vetting, it indicates that firms will have to hand over that material if requested.

“The more general language requiring telecom carriers and network service providers to carry out preventative measures, implement supervisory systems and prevent the dissemination of terrorist or extremist information still leaves concern about how companies will be expected to carry out this in practice,” the chamber said in its statement.

The law is seen as part of a broader national strategy to purge most foreign technology from the banks, state-owned enterprises and the military by 2020. Chinese President Xi Jinping said this month that cyber-scrutiny is necessary and urged nations to respect each other’s sovereignty over the Internet.

An initial draft of the law required foreign companies to keep servers and user data within China, but the clause was removed from the latest edition.

“The final version of the Anti-Terrorism Law reflects this concern in part by removing the language on encryption reviews and server/data localization that was present in a previous draft,” the chamber said.

The group said it hopes such new regulations “will not limit market access to European companies, impinge upon intellectual property rights, or create ambiguity in terms of compliance.”

In January, 17 U.S. business groups sent a letter to key officials including U.S. Secretary of State John Kerry, calling for immediate action to reverse the law. The groups said the law threatened the ability of U.S. companies to participate in China’s $465 billion market for information technology products if fully implemented.

— With assistance by Keith Zhai, and Kevin Hamlin

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