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Western companies are doing big business in China, but storm clouds lie on the horizon. According to a New York Times report, new banking security rules approved in the People’s Republic at the end of 2014 require those selling hardware and software to Chinese banks to install backdoors for the benefit of Chinese security services.
The rules also state that companies must “turn over secret source code [and] submit to invasive audits.” While seriously problematic for many firms, this element isn’t particularly surprising.
In the wake of Edward Snowden’s NSA revelations and the U.S.’s indictment of Chinese army officials for industrial espionage, China’s authorities have repeatedly implied that U.S. products are themselves a threat to national security, because they track users and/or may contain NSA backdoors. Reports in May 2014 suggested that China was considering banning banks from using [company]IBM[/company] servers.
On the consumer side, [company]Apple[/company] for one has already reportedly agreed to let China’s security services screen its products to ensure their safety. However, many firms may find this demand impossible to meet, due to intellectual property and security concerns.
Of course, the U.S. is also pushing companies dealing in communications devices and services to install backdoors for its own intelligence and law enforcement purposes. Both administrations – and that of the U.K. — want firms such as Apple to hand over a key to users’ private communications, even though the companies have recently been moving to a more secure end-to-end encryption model where they don’t hold any keys. This is effectively a backdoor demand, though authorities generally prefer to call it “lawful intercept.”
Draft Chinese anti-terrorism laws are pushing for the same thing. This is one of the many problems with official policies that undermine genuinely strong encryption. Particularly in a globalized trade context where your nation’s companies want to make money in foreign markets, it’s a bit hopeful to think backdoor privileges can be reserved only for your own security apparatus.
However, the Times piece talked about China’s new banking regulations forcing equipment makers to build in “ports” for official monitoring purposes. This is where things get really complicated: the rules may require companies to create special versions of their products for China, and U.S. tech firms and the Chamber of Commerce are reportedly anxious that the move may be protectionist in nature.