China has pulled itself up significantly, by the “open sewer” definition. But now it is threatening to go backward.
Since the late 1970s, China has grown prosperous by allowing foreign investors and corporations to operate inside Chinese borders. Thanks to enormous foreign direct investment (FDI) and a massive transfer of outside technology to Chinese businesses, the country now claims the world’s second-largest economy and a significant level of international clout. But recently FDI has been dropping and more intelligent outside corporations are less willing to build facilities inside China — for fear of being “ripped off.” That fear is now more justified than ever.
Stabbed in the Throat by Her Own Hand
On January 1, China’s Cryptography Law becomes effective. The legislation follows the December 1 implementation of the Multi-Level Protection Scheme 2.0, issued under the authority of the 2016 Cybersecurity Law.
- After all these “cybersecurity” rules are in place, no foreign company may encrypt data so that it cannot be read by the Chinese central government and the Communist Party of China. In other words, businesses will be required to turn over encryption keys.
- Chinese officials will be permitted, under Chinese law, to share seized information with state enterprises. This means the enterprises will be able to use that information against their foreign competitors.
Together, these measures show Beijing’s absolute determination to seize from foreign companies all their communications, data, and other information stored in electronic form in China.
After all these “cybersecurity” rules are in place, no foreign company may encrypt data so that it cannot be read by the Chinese central government and the Communist Party of China. In other words, businesses will be required to turn over encryption keys.
Companies will also be prohibited from employing virtual private networks to keep data secret, and some believe they will no longer be allowed to use private servers.
Beijing’s system, once implemented, will be so invasive that Chinese authorities will no longer need to ask foreign businesses to turn over data. Chinese officials will simply be able to take that data on their own.
“Once data crosses the Chinese border on a network,” writes Steve Dickinson in the China Law Blog, “100 percent of that data will be 100 percent available to the Chinese government and the CCP.” __ Much more at: Gatestone Institute
If your bank operates inside China, what data will be at risk?
It is difficult to conceive how any well-managed European or Anglospheric corporation could justify continuing to do business inside Communist Party controlled China after such laws are enforced. They will no longer be legally entitled to keep any secrets of any sort from the Chinese Communist Party or from the state owned enterprises that compete with them. China requires a constant inflow of outside technology, intellectual property, and targeted capital investment to be taken seriously.
Since Donald Trump began demanding that China play by international trade rules, dozens of corporations have moved production facilities outside of mainland China. With the passage of these invasive new “cybersecurity” rules, China has made it infinitely easier for most of the rest of outside corporations to get out of the increasingly totalitarian prison-state.
In many ways, the Communist Party is making China as much of an open sewer as ever. Mao killed 60 million or so Chinese with his Great Leap “reforms.” Xi seems determined to go him several better. The Chinese people have never needed much encouragement to tear the country to shreds. Interesting times, Chairman Xi.
There is another, darker way of looking at China’s new cybersecurity rules. It is possible that a large number of foreign corporations operating inside China will have no choice but to accede to Beijing’s demands if they want to keep “doing business.” At that point they will have become thralls and tributaries to Beijing in everything but name.
Around the world, China has bought corporate and political leaders with wealth it earned through theft, counterfeit, espionage, and a raft of other crimes. Among those who have been bought include a number of US politicians and businessmen on both sides of the aisle. These people would sell their wives, daughters, and mothers to China for a bit of power and dirty money. Selling anything else they could get their hands on would be no problem.
Xi’s China is a fundamental threat to the US and its allies, first, due to his objective of supplanting the US and the liberal international order it created — the order which allowed China to rise and incidentally made possible much of Bloomberg’s wealth. Second, because the West has not awakened to the threat, it allowed and continues to permit China access to its institutions, markets, finance, technology, universities, and even militaries. Third, China is building the infrastructure of the information age, shamelessly created in part due to its IP theft. __ https://spectator.us/michael-bloomberg-chinese-appeasement/
Poorly Made in China by Paul Midler
Japan, S. Korea, and Taiwan all managed to develop without much or any DFI at all. The CCP may simply have decided they no longer need DFI any longer to fuel China’s economic growth. This might be the real reason for China’s cryptography law.
I can only hope more corporations leave China and leave them to their own ends which will further cause the economic situation to deteriorate. But sadly we have companies willing to sell for the last dollar if it means a better earnings report next quarter.