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China Asks Foreign Tech Firms To Reveal Source Code Of Their Products

Thursday, April 23rd, 2015

The Chinese authorities have issued a fresh set of demands for foreign tech firms selling hardware and software products to the Chinese banks. According to recently approved banking security regulations, foreign technological companies doing business with the Chinese banks must now hand over source code of their software products, face tough audits as well as build secret backdoors in their hardware and software products. The move is the latest setback for foreign technological firms doing business in the country after the authorities banned hundreds of sites (including Gmail) and services of VPN providers.

This is not the first time the Chinese government has tried to put strict restrictions on foreign vendors. In May 2014, it was widely reported that the Chinese authorities were planning to bar banks from using IBM servers. Ever since Edward Snowden leaked details about NSA’s PRISM program, Beijing has considered U.S. made tech products as threats to its national security.

The demand to build backdoors within tech products is very similar to what NSA has been doing for the past several years. The law few months have seen a flurry of leaks which showed how intelligence agencies in the West have been spying on their own citizens as well as demanding tech companies to hand over data and encryption keys.

China is also drafting a strong anti-terror law which would essentially require all tech firms to install backdoors within their products. As per the recently approved banking security regulations, all vendors must build ports within their products for monitoring purposes. This may force many companies to redevelop their products for the Chinese markets.

The new regulations come at a time when China itself is under fire for spying on other countries. United States and many other countries have accused the Chinese authorities of spying on their governments and corporations through China-made tech products. Huawei, the largest telecom equipment maker in the world, has been blocked from working on broadband projects in U.S. and Australia. Smartphone company Xiaomi is also accused of sending user data to mainland China without the consent of users.

As expected, American technological firms are not happy with the latest diktat of the Chinese government. The US Chamber of Commerce along with several other foreign business groups have sent a letter to China’s cybersecurity committee in which they have strongly objected to the provisions approved under the banking security regulations. The letter expressed concern that the move would allow the Chinese authorities to control tech products sold within the country and may even lead to the creation of “cybersecurity review regime” by the government.

While most tech companies are not pleased with the latest regulations, others do not see a problem with the demands made by the Chinese authorities. Apple has recently agreed to inspection demands from the Chinese authorities and has decided to co-operate with the government for evaluating the security of its products. This is hardly surprising since China is one of the biggest markets for Apple and contributes significantly to its bottom line. However, for many other American technological firms, doing business in China has now become a lot more difficult.

April 23, 2015

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