China is introducing strict new rules for technology companies that want to sell their products to Chinese banks, The New York Times reports — stoking fears of a crackdown that could harm American businesses.
Now, companies hoping to sell equipment to Chinese financial bodies will have to give the Chinese government unprecedented access to their products, according to documents seen by the newspaper. This includes handing over source code, establishing research centres in the country and building “‘ports’ to allow Chinese officials to manage and monitor data processed by their hardware.”
The new rules are significant in themselves: International companies produce as much as 90% of “high-end servers and mainframes” used in the country. Many of these companies are American, and will be loathe to hand over the highly confidential material required.
And other proposed anti-terror legislation goes further still, demanding technology companies provide encryption keys for encrypted services and to store data on Chinese users within the country.
The suggestions will perturb numerous American technology companies looking to do business in the increasingly significant region — chief among them, Apple.
Analysts have predicted that Apple is now selling more iPhones in China than the US. It’s an incredibly important market. And we also know that China is already pressuring Apple to cooperate with them over security fears. Tim Cook has agreed to “security audits” of its products sold in the country — but he also says Apple has “never worked with any government agency from any country to create a backdoor in any of our products or services… And we never will.”
As such, Apple might bend on other requirements, but it’s unlikely to budge on creating backdoors or surrendering encryption keys. Apple is already under fire in the US over its decision to enable encryption by default (one senior cop has called the iPhone the “phone of choice for paedophiles”), but the company is holding fast. It’s also being pressured by the British government on the same subject.
The New York Times reports that foreign businesses are objecting to China’s proposals, claiming they “amounted to protectionism” — and it’s probably true, forcing companies like Apple to jump through ever-more hoops to keep operating in the company.
It’s also a boon to Apple’s Chinese arch-rival, Xiaomi. They have been referred to as the “Apple of China,” and are sometimes accused of stealing the Cupertino company’s designs. But recently they have developed their own designs to great success, and have even taken to mocking Apple in adverts and targeting them with trade-ins.
Apple may have just had the most profitable quarter in corporate history, but it’s not all good news.