How will China's Cybersecurity Law affect other countries and businesses?

China is all set to implement its controversial Cybersecurity Law on June 1, six months after it was passed by the National People's Congress (NPC) Standing Committee. The law has several regulations, including banning of collecting and using personal information of users by internet service providers.

The Cybersecurity Law was adopted with an aim to protect rights of the citizens, national security, public interest and several others. Network operators providing service activities have to abide by the law formulated by the Chinese government or face the consequences.

Also read: Chinese government wanted a more secure Windows 10, and Microsoft gave it

Under the new Cybersecurity Law, internet service providers can't collect information of its users if not relevant, and they have been prohibited from leaking or sharing personal information collected. Users can now ask the service providers to delete their personal information in case of an abuse.

Internet users (individuals and organisations) are prohibited from endangering network security and national security, inciting separatism, disseminating violent, obscene and sexual information, supporting terrorism, inciting ethnic hatred and several others under the new law. Nobody is allowed to establish websites or communications groups for the purpose of perpetrating fraud, unlawful activities, selling of banned substances and other activities.

What if any of the laws is broken?

The relevant competent departments will ask the network operators to rectify in case of a violation of any of the provisions listed in the new law. If necessary action is not taken even after a warning by the government officials, both network operators and those responsible for dissemination of objectionable content will be fined heftily – between 50,000 and RMB 500,000 for the former and between 10,000 and RMB 100,000 for the latter.

Will China's Cybersecurity Law affect other countries and businesses?

China resolved to adopt the Cybersecurity Law amid its growing tension with the United States over trade, and allegations of hacking activities. However, the move can have a devastating effect on foreign companies that are trying to find a foothold in the country. Experts fear that the move could force overseas technology companies to shut down.

Emeritus Professor Georges Haour said in a write up on IMD website that "any law impacting the online space—cybersecurity included—will make ripples in the way China does business" as the country has close to 400 million people who do most of their payments via smartphones and over 700 million internet users and information technology market worth over $300 billion.

Haour has described the new cybersecurity law as "alarming." He said the "type of businesses most at risk will be those with special hardware and systems for network management" and it includes data from and for ATMs. It is dangerous as network equipment and software have to be certified by the government but it can be passed on to Chinese companies, and even data collected in critical areas have to be stored in China. He said this procedure will force foreign companies to make "expensive investments to build duplicate facilities within China."

He said China's cybersecurity law is as alarming for business as US President Donald Trump's trade policies.