China is cracking down on cyber security. Demanding new banking regulations and draft counter-terrorism legislation could make it harder for foreign companies to compete in the People’s Republic. But even though domestic players should benefit, they are far from happy. Breakingviews attempts to crack the code.
What do the new rules say?
China’s banking regulator last year issued a directive stating that three quarters of all information technology used by banks must be “secure and controllable” by 2019. The regulator followed up with a second set of regulations in December last year.
Most controversial is the demand that banks register source code for software, operating systems and databases with the regulator. Other requirements include using only approved encryption technology, filing intellectual property rights in China, and building surveillance “ports” into hardware which allow regulators to access data. Technology companies are also required to set up research and development centres in the country.
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