On July 10, the Cyberspace Administration of China (CAC) — the country’s central Internet regulator — proposed draft cybersecurity review measures.
According to Article 6 of the draft, businesses that intend to be listed on foreign stock exchanges and possess the personal electronic information of more than 1 million customers must report for a review by the CAC.
The draft measures followed the agency’s announcements days earlier of cybersecurity reviews of China’s ride-hailing giant Didi Chuxing, YMM-Full Truck Alliance Co, Guiyang Huochebang Technology Co and Boss Zhipin. The reviews of these four major platforms were based on the amendments, which had yet to be announced.
On July 9, just days after Didi launched an initial public offering in the US, the CAC ordered the removal of Didi’s apps from app stores in the country, along with 25 related apps, for “serious violations of laws and regulations” in its collection and use of personal information. This has highlighted that in China, enforcement comes first and legislation later.
Article 2 of the draft states: “Critical information infrastructure operators ... procuring network products and services and data handlers ... conducting data handling activities that influence or may influence national security should conduct a cybersecurity review according to these measures.”
This article clearly shows that the draft is not restricted to companies that intend to conduct listings in a foreign country or companies holding personal information of more than 1 million users.
Instead, operators conducting data handling activities that “influence or may influence” China’s national security are included.
What is the standard for determining what affects national security? Based on China’s culture of letting politics lead and law enforcement serve the overall situation, authorities are given much leeway in terms of administrative discretion. This is like holding a knife to the neck of businesses, and it carries great uncertainty.
The draft has empowered Chinese government agencies to launch cybersecurity reviews at any time of their choosing in the name of national security.
The result for Taiwanese businesses operating in China could be that they lose competitiveness by having to give up business secrets, and they could even become targets of fabricated charges.
Faced with this situation, Taiwanese businesspeople working in China should prepare to protect their business information and lessen the impact.
Yu Kung is a Taiwanese businessman working in China.
Translated by Eddy Chang
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