China Expands Its Cybersecurity Regulations

As noted recently in the Wall Street Journal, “New cybersecurity rules will give Chinese authorities sweeping powers to inspect companies’ information technology and access proprietary information—steps that are likely to deepen concerns among foreign businesses about their China operations.”  These regulations were issued pursuant to the Cybersecurity Law of the People’s Republic of China, which came into force on June 1, 2017.

The new rules, which take effect November 1, 2018, have the potential for chilling foreign firms from doing business in China, or at the very least increasing the costs of doing business there.  Many fear this law could be used to force companies to disclose source codes and other corporate secrets as part of their efforts to demonstrate their systems were secure.  Even so, some tech giants (including Microsoft) have started to build data centers in China, to abide by the ban on storing certain data outside of China.

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