https://www.gatestoneinstitute.org/15304/china-business-security-threat
“What I really want to know about is the intellectual property [IP] part of this…. isn’t it true that they’ve [China] just instituted their own new cyber security rules that are in place that say that no foreign company may encrypt data so it can’t be read by the Chinese central government and the communist party of China? In other words, businesses are required to turn over the encryption keys. Are these new rules that China just put in place basically negating any opportunity for the U.S. to protect its IP?” — Maria Bartiromo, Sunday Morning Futures, Fox News Channel, Real Clear Politics, December 15, 2019.
China’s 2015 National Security Law… says that all citizens, firms and organizations have “the responsibility and obligation to maintain state security.” Its 2017 National Intelligence Law obligates such individuals and entities to “support, provide assistance, and cooperate in national intelligence work…” It is not hard to see how China could apply rules even beyond the Encryption Law to justify violations of a deal with the U.S. under the guise of “national security concerns,” and the “rule of law.”
“[T]heir own track record, as well as the practices of the Chinese government, demonstrate that Huawei and ZTE cannot be trusted.” — US Attorney General William Barr; letter to the Federal Communications Commission, November 13, 2019.
How can the U.S. transact with China in any strategically significant area given the communist regime’s aims, and its power over every Chinese entity? Is the US ultimately trading away its freedom?
As the world awaits the details of the Trump Administration’s reported “phase one” trade deal with China — U.S. officials expect it to be executed in January 2020 — a more fundamental question arises: Should America be doing business with China in strategically significant areas, or even beyond?
In a December 15th interview with Director of the United States National Economic Council, Larry Kudlow, Fox Business anchor Maria Bartiromo indirectly touched on this question. Bartiromo asked Kudlow if the proposed deal accounted for new Chinese regulations that would seemingly threaten the intellectual property (IP) of American firms transacting with Chinese ones. She was likely alluding to China’s new Encryption Law, set to take effect on January 1, 2020. Some have suggested that the law would enable the Chinese Communist Party (CCP) to collect all information that traffics on Chinese networks. To the extent the trade deal does not account for this law, the implication is that its provisions relating to IP protections could be rendered moot. Here is the relevant portion of the exchange: