Page 274 - 2017 White Paper
P. 274
7 White Paper on the Business Environment in China
Notable Policy Activity the U.S., including the American Chamber of Commerce
in China, as well as from Europe and Japan, to pen a letter
Import Tariffs on Electronic Goods of petition to Premier Li Keqiang in late summer of 2016,
arguing the new law poses data security risks, discourage
Ten years after the PRC’s accession into the WTO, foreign investment, cut off China from the global digital
import tariffs on some electronic products (including economy and derail China’s own growth. The law affects
personal computers and digital cameras) were cut by the both domestic and foreign firms operating on the Chinese
Ministry of Finance from 20 percent to 10 percent (Tuo mainland and covers a wide range of activity relating to
2011). use of the Internet and information and communications
technologies (ICT) (Pham 2016).
“The change will permit distributors and dealers to
make their prices similar to those overseas, removing Among other things, the new law requires internet
an incentive for consumers to buy their digital devices operators to cooperate with investigations involving
elsewhere”, a China Daily-quoted analyst observed at crime and national security, and imposes mandatory
the time, referring to the common practice of affluent testing and certification of computer equipment.
Mainland consumers traveling to Hong Kong or other Companies must also give government investigators full
nations to purchase such goods — in particular personal access to their data if wrong-doing is suspected. The fear
computers and mobile phones such as the now- among foreign companies is that requirements to store
ubiquitous iPad (Tuo 2011). data on Chinese servers and employ only technology
deemed “secure” means local firms gain yet another
Controversial Cybersecurity Law edge over foreign rivals such as Microsoft Corp and Cisco
System Inc. The law also requires business info and data
At the bimonthly session of the National People’s on Chinese citizens gathered within the country to be
Congress (NPC) Standing Committee on November 7th, kept on Chinese servers and not be transferred abroad
2016, China’s top legislature passed a new Cybersecurity without permission. That last condition hampers the
Law to “safeguard sovereignty on cyber space, national operations of multinationals accustomed to a global
security and the rights of citizens”. The new law will take Internet computing environment (Larson et al. 2016).
into effect on June 1st, 2017 (Xinhua 2016).
While the new law steps up privacy protections for
The law reads that the government will take measures users’ data to reduce risks of it being stolen, leaked or
to “monitor, defend and handle cybersecurity risks and used illegally. But it also beefs up the government’s power
threats originating from within the country or overseas to substantially control online information flow, some
sources, protecting key information infrastructure from practices of which are already becoming commonplace in
attack, intrusion, disturbance and damage”. Efforts will China, such as obtaining records of the dissemination of
also be made to punish criminal activities online and information deemed illegal, the right to restrict internet
safeguard the order and security of cyberspace. Individual access in places where public security is threatened,
users and organizations are not allowed to jeopardize the right to delete information that was counter to
security on the Internet or use it to “damage national laws and regulations, and to stop that information from
security, honor and interests”, according to the provisions. entering China and imposing similar responsibilities on
Online activities that are attempts to overthrow the internet operators, including websites and social media
socialist system, split the nation, undermine national platforms, and making it their duty to report breaches to
unity, advocate terrorism and extremism are all the authorities, mandating operators to require users to
prohibited, according to the provisions, which also forbid log in with their real names. Failure to comply could result
activities including inciting ethnic hatred, discrimination in very hefty fines and the loss of a business license (Gan
and spreading violence and obscene information online 2016).
(Xinhua 2016).
More critical to the business community, the law lays
China pushed through with the new despite strong out special security requirements for all networks and
and sometimes very vocal opposition from the foreign systems in “critical industries” such as telecoms, energy,
business community. While still in its draft stages, the law transport, finance, national defence and military matters,
had already prompted more than 40 business groups from government administration and other sensitive fields.
274
Notable Policy Activity the U.S., including the American Chamber of Commerce
in China, as well as from Europe and Japan, to pen a letter
Import Tariffs on Electronic Goods of petition to Premier Li Keqiang in late summer of 2016,
arguing the new law poses data security risks, discourage
Ten years after the PRC’s accession into the WTO, foreign investment, cut off China from the global digital
import tariffs on some electronic products (including economy and derail China’s own growth. The law affects
personal computers and digital cameras) were cut by the both domestic and foreign firms operating on the Chinese
Ministry of Finance from 20 percent to 10 percent (Tuo mainland and covers a wide range of activity relating to
2011). use of the Internet and information and communications
technologies (ICT) (Pham 2016).
“The change will permit distributors and dealers to
make their prices similar to those overseas, removing Among other things, the new law requires internet
an incentive for consumers to buy their digital devices operators to cooperate with investigations involving
elsewhere”, a China Daily-quoted analyst observed at crime and national security, and imposes mandatory
the time, referring to the common practice of affluent testing and certification of computer equipment.
Mainland consumers traveling to Hong Kong or other Companies must also give government investigators full
nations to purchase such goods — in particular personal access to their data if wrong-doing is suspected. The fear
computers and mobile phones such as the now- among foreign companies is that requirements to store
ubiquitous iPad (Tuo 2011). data on Chinese servers and employ only technology
deemed “secure” means local firms gain yet another
Controversial Cybersecurity Law edge over foreign rivals such as Microsoft Corp and Cisco
System Inc. The law also requires business info and data
At the bimonthly session of the National People’s on Chinese citizens gathered within the country to be
Congress (NPC) Standing Committee on November 7th, kept on Chinese servers and not be transferred abroad
2016, China’s top legislature passed a new Cybersecurity without permission. That last condition hampers the
Law to “safeguard sovereignty on cyber space, national operations of multinationals accustomed to a global
security and the rights of citizens”. The new law will take Internet computing environment (Larson et al. 2016).
into effect on June 1st, 2017 (Xinhua 2016).
While the new law steps up privacy protections for
The law reads that the government will take measures users’ data to reduce risks of it being stolen, leaked or
to “monitor, defend and handle cybersecurity risks and used illegally. But it also beefs up the government’s power
threats originating from within the country or overseas to substantially control online information flow, some
sources, protecting key information infrastructure from practices of which are already becoming commonplace in
attack, intrusion, disturbance and damage”. Efforts will China, such as obtaining records of the dissemination of
also be made to punish criminal activities online and information deemed illegal, the right to restrict internet
safeguard the order and security of cyberspace. Individual access in places where public security is threatened,
users and organizations are not allowed to jeopardize the right to delete information that was counter to
security on the Internet or use it to “damage national laws and regulations, and to stop that information from
security, honor and interests”, according to the provisions. entering China and imposing similar responsibilities on
Online activities that are attempts to overthrow the internet operators, including websites and social media
socialist system, split the nation, undermine national platforms, and making it their duty to report breaches to
unity, advocate terrorism and extremism are all the authorities, mandating operators to require users to
prohibited, according to the provisions, which also forbid log in with their real names. Failure to comply could result
activities including inciting ethnic hatred, discrimination in very hefty fines and the loss of a business license (Gan
and spreading violence and obscene information online 2016).
(Xinhua 2016).
More critical to the business community, the law lays
China pushed through with the new despite strong out special security requirements for all networks and
and sometimes very vocal opposition from the foreign systems in “critical industries” such as telecoms, energy,
business community. While still in its draft stages, the law transport, finance, national defence and military matters,
had already prompted more than 40 business groups from government administration and other sensitive fields.
274
