China played down U.S. concerns that proposed anti-terror legislation would give the Chinese government sweeping power to police electronic communications and marginalize foreign companies fighting for a share of China's $465 billion technology market, saying Tuesday that the law is purely designed to address domestic security issues.
Foreign Ministry spokeswoman Hua Chunying said the law is necessary to fight terrorism, and that China hopes "the United States will regard this in a calm and objective way."
Four U.S. Cabinet members, including Secretary of State John Kerry, and the U.S. trade representative wrote their Chinese counterparts in February, expressing "serious concerns" about the draft anti-terror law and rules for technology procurement at Chinese banks, a U.S. official said on condition of anonymity because he was not authorized to discuss the matter publicly. It is unusual to have four Cabinet officials weigh in on a China trade issue and underscores the seriousness of the concern in Washington, he said.
China's moves to strengthen cybersecurity come in the wake of revelations of widespread U.S. government surveillance, and have raised questions about the extent to which government surveillance will interfere with the ability of private companies to effectively globalize.
Some say China is seeking to go no farther than the U.S. in the name of national security. "We just did what the Americans have already done," said Shen Dingli, director of Fudan University's Center for American Studies. "You could choose to leave, leaving the opportunity of making money from 1.3 billion people. We have substitutes."
According to the latest publicly available draft of the law, which is expected to be discussed at the National People's Congress this week, network operators and service providers doing business in China would have to build in "backdoors" for government surveillance, hand over encryption keys to Chinese authorities and store user data within China.
Ted Moran, the Marcus Wallenberg professor of international business and finance at Georgetown University, said U.S. laws do all of that and more, giving the U.S. government the reach to pursue user data stored in other countries.
"There's all kinds of hypocrisy going on here," Moran said.
He said there is more legal and congressional oversight enshrined in U.S. law, though its effectiveness is a matter of debate. The Communications Assistance for Law Enforcement Act, for example, requires telecom carriers to allow law enforcement agencies to conduct electronic surveillance pursuant to a court order, he said. The U.S. Patriot Act, however, allows surveillance orders to be issued by a special, secret court, he said.
Business groups worry that the language in China's anti-terror law is so broad that it could undermine the ability of U.S. companies to send encrypted emails or operate the kind of private corporate networks commonly used to secure communications.
"In addressing law enforcement and security objectives, governments should consider the impact on economic security and growth, global commerce and users' privacy and security," said Jacob Parker, chief representative of the U.S.-China Business Council in Shanghai.
The anti-terror law comes on the heels of new regulations that require Chinese banks to have 75 percent of their IT infrastructure certified as "secure and controllable" by the Chinese government by 2019.
While those rules are expected to take effect March 15, details of what companies would have to do to comply with the vetting process are not public. People familiar with the regulations say companies would have to use local encryption algorithms, undergo intrusive security audits, and disclose source code and other proprietary information to the Chinese government — steps few Western companies would be willing to take.
"The rules aren't about security — they are about protectionism and favoring Chinese companies," U.S. Trade Representative Michael Froman said in a statement last week. "The administration is aggressively working to have China walk back from these troubling regulations."
The debate over the anti-terror law, China's first, comes a year after knife-wielding attackers killed 29 people at a train station in the southwestern city of Kunming. Beijing blamed Muslim Uighur separatists, who it says are being swept up in a global jihad in part due to extremist propaganda spread online.
Tensions between Uighurs and China's ethnic Han majority have resulted in at least 400 deaths over the last two years. Additional deaths are believed to go unreported in China's state media.
Associated Press news assistants Fu Ting in Shanghai and Zhao Liang in Beijing contributed to this report.