China new data security law twists arms of Tech giants

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China has established a new set of guidelines for tech companies that are dealing with data for business purposes. But the laws are applicable more to the native companies operating in the Republic of China than those operating on foreign shores.

 

The new Data Security law specifically hits companies that mishandle core state data and can hit violators with heavy penalties- up to 10 million Yuan or $1.6m in USD and cancel their trade licenses on a temporary or permanent basis.

 

As said earlier, the law is aimed at homegrown tech giants like Alibaba, Tencent, and ByteDance and will not apply to those doing business from the Silicon Valley of America- such as Apple Inc.

 

So, it gives plenty of wiggle room to all businesses that deal with data, provided they abide by the latest laws formulated by the National Assembly. And if found guilty i.e cause concern to national security will have to face penalties that might roll them out of business forever.

 

Technically, the law was to be executed in September last year. But the Chinese government decided to delay it for some time, to give businesses enough time to fight out the financial crisis that erupted from the spread of the Wuhan Virus.

 

Note 1- As soon as the tentative draft was released to the companies in January this year, some firms decided to outsource their core businesses to the west to keep out the influence of the negative repercussions erupting from the latest data security law. And the best example for such trade duplication is Byte Dance that moves its development operations to the Cayman Islands of the UK- only to get rid of the tag that it was working for the Chinese Communist Party.

 

Note 2- According to the data laws prevailing in China, all companies need to share their user data with the countries intelligence resources under specific circumstances. Moreover, the law also makes it mandatory for companies to not share data with foreign law enforcement agencies unless they are granted to do so by the Xi administration under legal circumstances. And if any company found violating this law will be facing the liability of prosecution for causing ‘harm to national security.

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Naveen Goud is a writer at Cybersecurity Insiders covering topics such as Mergers & Acquisitions, Startups, Cyber Attacks, Cloud Security and Mobile Security

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