April 2, 2019 / 4:05 AM / 2 months ago

Breakingviews - America can define down China’s harsh cyber rules

Computer code is seen on a screen above a Chinese flag in this July 12, 2017 illustration photo. REUTERS/Thomas White/Illustration

HONG KONG (Reuters Breakingviews) - The United States may have hit on an opportunity to push back against China’s harsh cybersecurity law. Beijing could be willing to bargain over rules for how and where companies doing business in the country store data. It would be a surprise softening of its position in trade talks. With more allies on this issue than usual, including in China, Washington has a stronger chance of winning concessions.

China’s law, which came into effect in 2017, is deeply controversial among U.S. authorities, as well as big banks and other American businesses. It even featured in a U.S. Trade Representative investigation into China’s technology transfer and intellectual property practices, a probe that effectively kicked off the intense broader dispute between the world’s two biggest economies. Negotiators from both sides last week discussed China walking back the cybersecurity regulations, the Wall Street Journal reported.

Corporate executives fret that parts of the law, along with a blizzard of related rules and standards, are far-reaching and overly vague, providing Beijing with ample scope to meddle. One such area involves “critical information infrastructure”. It entails strict provisions requiring data to be housed inside China, as well as spot inspections and even black-box security audits with little guidance on how to comply, notes Samm Sacks of public policy think tank New America.

Some aspects of Beijing’s policy, including specifics surrounding critical information infrastructure, are in the process of being fleshed out. That makes it an especially good time for U.S. trade negotiators to press their case on more narrowly defining the most sweeping aspects. The mere fact that Chinese officials are willing to discuss the topic in a trade setting – rather than insisting it is a national security issue – suggests a change of tone.

What’s more, plenty of other foreign companies and diplomats share U.S. concerns. Even Chinese tech outfits with ambitions to expand overseas are worried about the implications of overly tight data transfer rules. Exactly why President Xi Jinping’s team might be willing to haggle on this sensitive subject isn’t clear, but it is one area of the unpredictable trade negotiations where the United States can probably claim a broad consensus.

Breakingviews

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