While China is still debating whether or not to implement rare-earth quotas or use any of the other "nuclear options" it has available in response to escalating trade and tech war, the Global Times reports that a new cybersecurity rule indicates possible retaliation against the US as it could set the stage for Chinese regulators to take necessary action against US technology companies if their products and services are found to pose a threat to China's national security, the Global Times reported overnight.
Under the draft regulation, which is a direct response to rising pressure on Huawei by the US and various other nations and which was released on Friday for public comment, companies involved in key information infrastructure would face cybersecurity reviews by regulators, if they acquired internet products and services.
In what is China's response to America's Committee on Foreign Investment in the United States, or CFIUS, nearly a dozen government agencies, including the National Development and Reform Commission, the Ministry of Public Security and the Ministry of Commerce, will set up a mechanism for cybersecurity reviews and the CAC will set up an office to coordinate the efforts.
If acquisitions of products and services could cause disruption to key information infrastructure, or major losses of personal information and important data, or pose other security risks, they must be reported to the CAC's cybersecurity review office.
"This is a very major move for China to step up its efforts in protecting its cyberspace security," Xiang Ligang, director-general of the Beijing-based Information Consumption Alliance, told the Global Times on Sunday. "Establishing an effective cybersecurity review mechanism is very important for the country," he said, a hint that since the US will block Chinese acquisitions, Beijing will do the same although it's not quite clear how China - a chronic thief of offshore technology will benefit from this. Related: The True Cost Of Opportunity In America
In 2016, China adopted a cybersecurity law that paid great attention to the protection of national security and privacy and offered great leeway for security officials and regulators to conduct oversight of the country's massive internet sector. The latest draft regulations are aimed at improving enforcement of those laws, Xiang said.
But the timing of the new regulation has also gained much attention and even speculation that China could retaliate against the US crackdown on Chinese tech giant Huawei by also using national security reviews.
"[The Huawei case and the new regulations are not inherently] related but I think this also gives officials a direct tool to investigate US companies if they pose cybersecurity risks," Xiang said. "If [the US] can conduct reviews of Chinese companies on the grounds of national security, so can China. That's beyond reproach."
Amid the US crackdown on Huawei, Chinese officials have repeatedly criticized what they call US officials' abuse of the national security review process to target Chinese tech companies, and they have vowed to take necessary measures to protect the legitimate rights and interests of Chinese companies. And yet, as noted above, it is unclear how China's blocking of foreign investment on the mainland - a critical cog of China's relentless directive to reverse engineer and steal every foreign technology it has access to - will benefit Beijing's aspirations to supplant the US over the next decade.