Beijing’s Fear of Technology

http://www.nytimes.com/2015/03/11/opinion/beijings-fear-of-technology.html

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BEIJING — Since China opened to the West three-and-a-half decades ago, foreigners, foreign companies, and foreign technology have oftentimes been suspect in the eyes of some government factions. Chinese reformers have had an uphill battle in overcoming these deeply rooted cultural fears.

The authorities’ paranoia is at the heart of the 1985 Chinese film “The Black Cannon Incident.” In the picture, the lead character, Zhao Shuxin, is a capable and competent German-speaking engineer in a state-owned mining company that seeks to obtain West German technology. Mr. Zhao is an avid player of Chinese chess and when he finds one of his chess pieces missing — the black cannon — he sends a telegram to a hotel that he previously stayed at requesting the hotel’s help in finding it: “Missing black cannon. 301. Search for Zhao.”

The ambiguously worded telegram arouses the interest of security authorities and the police detain Mr. Zhao, believing he is spying for foreigners and involved in an illicit arms deal. The chess piece is finally found and Mr. Zhao is cleared, but the factory Communist Party chief chastises him for sending the telegram anyway.

“The Black Cannon Incident” reflects how innocuous communications can be misinterpreted as something sinister and as a threat to national security — and it’s also a not-so-subtle attack on the overreaching and paranoia of the authorities. The reformers in the government in 1985 allowed this political satire to be shown in limited release to send the nation a message that people should be more trusting of foreigners to encourage foreign direct investment and the introduction of new technology.

Fast forward to 2015 and there is a worrying trend involving a series of policy initiatives that could restrict the flow of foreign goods and services in the information communications technology sector.

Such restrictive policies could put the country and its companies at a significant disadvantage in the global marketplace. Indeed, one unfortunate consequence of overbroad antiterrorism and national security policies would be to isolate China technologically from the rest of the world, and the end result of that could be to limit the country’s access to cutting-edge technology and innovation.

For example, the proposed antiterrorism law — which is under consideration at the National People’s Congress currently meeting in Beijing — contains requirements for any information communications technology suppliers in the China market to provide in-country data storage and to alter or modify their products or services to assist in the “counterterrorism” work of the authorities. Under the law, telecom and Internet operators will be required to install intercept support and decryption capabilities in their systems prior to the use or sale in the Chinese market.

China also adopted new banking guidelines in December that outline security criteria for technology products to be considered “secure and controllable” for use in the financial sector. To attain such certification, source codes in operating systems and database software produced abroad or domestically must be registered with the government. The submission of source codes and other information creates significant intellectual property risks for information-tech companies. The China Banking Regulatory Commission provided notice to banks to submit compliance plans by March 15.

Similarly, in recent months, as the government tries to get control over the dissemination of information, there has been an uptick in the blocking of foreign websites, a noticeable slowdown in Internet speed and a denial of virtual private network services. A recent business climate survey conducted by the American Chamber of Commerce China found that 83 percent of its member companies were negatively affected by Internet censorship by the Chinese government.

At a minimum, the proposed antiterrorism law and the banking rules will create additional intrusive regulatory challenges for information-tech providers and their customers. The unfortunate result of excessive control over email and Internet traffic is the slowing down of commerce.

Rather than creating restrictive security policies, the Chinese government should take a more rational approach to security issues and give equal attention to the healthy development and global integration of China’s information-tech sector. This is especially important as Beijing struggles to maintain economic growth levels and rebalance the economy.

Yet 30 years after the release of “The Black Cannon Incident” we are still living in a time in which trust appears to be in question, foreign technology is deemed to be suspect, and paranoia over security interests prevails.

James Zimmerman is a lawyer in Beijing and chairman of the American Chamber of Commerce in the People’s Republic of China.