US Presses China on Technology Rules

US officials and business groups are objecting to a draft Chinese antiterrorism law that they say will serve as a new way for Beijing to acquire proprietary information or nudge foreign technology companies out of the vast market.

The proposed law is the latest challenge foreign tech companies face in China in the wake of disclosures about US intelligence-gathering activities and heightened mistrust over cybersecurity between Washington and Beijing. The draft law requires both foreign and domestic telecommunications and Internet service providers to create backdoors in their systems to give Chinese authorities surveillance access, hand over copies of their encryption codes and assist government agencies with decryption when asked, among other provisions. Companies will be required to store Chinese users’ data on servers in the Chinese mainland or they won’t be allowed to operate in China, it says. Business groups and industry insiders say they are worried about the draft law’s scope and whether they are able to carry out its requirements.

“US tech companies will be faced with a very difficult choice because they will have to decide whether they want to stay in China and basically submit to surveillance,” said Robert Atkinson, who heads the Information Technology and Innovation Foundation, a Washington-based think tank.