China Puts Happy Face on New Net Rules

China has sent ripples of distress through the Internet community with a variety of new rules concerning state secrets and encryption, but is seeking today to reassure foreign investors that the regulations will not limit the free exchange of online information.

According to news reports today and Wednesday, sweeping new regulations on encryption technology could restrict sales of everything from imported software to mobile phones in China.

Foreign Ministry spokesman Zhu Bangzao said, however, “This will not affect the pace of foreign companies entering China.”

Strict New Regulations

Under regulations due to take effect on Monday, all foreign and Chinese companies or individuals using encryption technology to protect e-communication from eavesdropping must register with the government.

The registration is seen as the first step in forcing foreign companies to reveal their encryption secrets, and possibly the first step toward a ban on foreign encryption sales in China.

U.S. Ambassador to China Joseph Prueher said the problem was of “high interest” to the U.S. government and that two issues are at stake, according to Reuters. The first is the free flow of information, and the second is the apparent effort by China to force foreign companies to reveal their encryption methods, the report said. He added that the situations complicate China’s efforts to join the World Trade Organization (WTO).

Foreign Web operators in China have called the new rules vague and complicated, and said they risk sales in China and face the threat of commercial espionage or competition from state-owned Chinese firms with potential access to foreign encryption secrets, Reuters reported.

Online Angst

On Wednesday, China created online angst with the introduction of rules that penalize Web sites for “leaking state secrets,” prompting speculation on the curbing of news content.

Under rules published in the People’s Daily newspaper, Web sites are required to undergo security checks, Reuters said, adding the regulations appear to give authorities control over the Internet in the name of protecting sensitive government information. China’s definition of state secrets is so broad it can encompass virtually any information not specifically approved for publication, the report alleged.

Reuters interpreted the new edict as declaring, “All organizations and individuals are forbidden from releasing, discussing or transferring state secret information on bulletin boards, chat rooms or in Internet news groups.”

The report added that the security rules could affect so-called “cyber-reporters,” who write news specifically for online distribution.