China’s Cybersecurity Law Enacted

Worries for technology companies in China have been compounded with the enactment today of China's new Cybersecurity Law.

Chinese media report the law was enacted today by the National People’s Congress Standing Committee.

While many of the overarching guidelines of the law should not raise much ire from netizens or tech companies, the vagueness of some stipulations should.

For example, companies in China are required to store both personal information of users and critical business information regarding the companies' Chinese operations on servers located in China. But the definition of "important business data" is unknown and unclear, according to the latest draft of the law.

Most worrying is the ability for the government to shut down the Internet in the event of "major security incidents". Seven years ago, most of the Internet in China's Xinjiang Province was shuttered for many months as the national government sought to quell unrest in the Muslim-influenced region in northwestern China. That closure cut-off access for domestic and foreign businesses operating in the region, including hotels such as the Sheraton in Urumqi, the province's capital city.

While closure of Internet services may be beneficial in short time periods to assist law enforcement agencies to fight law-breakers, the threat to business operations is very real in China and may cause both domestic and foreign businesses to question whether non-essential services should be off-shored instead.

But some companies may not be so worried about the enhanced need for digital storage in China. Chinese cloud service providers such as Aliyun and Huawei may benefit from the enhanced oversight and planning now necessary for more companies operating in China.