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PRC's computer security plans strain ties with US

The Chinese government is stirring trade tensions with Washington with a plan to require that foreign computer security technology be submitted for government approval, a move that might require suppliers to disclose business secrets.

Rules due to take effect on May 1 require official certification of technology widely used to keep e-mail and company data networks secure. Beijing has yet to say how many secrets companies must disclose about such sensitive matters as how data-encryption systems work. But Washington said the requirement might hinder imports in a market dominated by US companies and is pressing Beijing to scrap it.

“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.”

Beijing tried earlier to force foreign firms to reveal how encryption systems work and has promoted its own standards for mobile phones and wireless encryption.

Those attempts and the new demand reflect Beijing's unease about letting the public keep secrets, and the government's efforts to use its regulatory system to help fledgling Chinese high-tech companies compete with global high-tech rivals. 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.

The computer security rules 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. Such technology is enmeshed in products sold by Microsoft Corp, Cisco Systems Inc and other industry giants.

Giving regulators the power to reject foreign technologies could help promote sales of Chinese alternatives. 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. Requiring disclosure of technical details might also help Beijing read encrypted e-mail or create competing products.

US officials objected to the rules in August at a regular meeting of the US-China Joint Commission on Commerce and Trade.

China agreed to delay releasing detailed regulations pending negotiations, but has not postponed the May enforcement deadline. No date has been set for more talks.
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