China summons Western tech firms, revives bank cyber rules
At
a meeting last week in Beijing, officials from the China Banking
Regulatory Commission (CBRC) told representatives from several Western
technology companies, including Microsoft, IBM and Cisco Systems, they
would seek opinions over the next month on a new version of the bank
procurement rules, one of those present at the meeting said.
The
previous regulations – containing provisions that required Chinese
banks to buy more domestic IT equipment and Western tech vendors to
disclose secret source code if they sell to lenders – drew strong
protests from foreign business lobbies, the U.S. and European
governments.
Chinese
regulators suspended the plan in April, saying they would weigh feedback
from domestic banks. The suspension was seen as a diplomatic victory
for the Obama administration, coming shortly after visits to Beijing by
Treasury Secretary Jack Lew and Commerce Secretary Penny Pritzker.
While
foreign tech companies were briefly optimistic that the rules would be
dropped indefinitely, their resumption now underlines China’s
determination to follow through on what is considered a top national
security priority for Beijing – and a persistent irritant in relations
with Washington.
Xi,
who visited California in 2013, will make his first state visit next
month to the White House, where cyber security disputes, including the
theft of U.S. government personnel data by suspected Chinese hackers,
are expected to be on the agenda.
The CBRC did not immediately respond to a fax requesting comment.
SLUMP IN SALES
Executives
at Western companies, which make hundreds of millions of dollars a year
selling everything from servers to cloud computing software to China’s
big banks, welcomed the opportunity to offer input, but remained
skeptical that the procurement rules, even if they were revised, would
reverse a recent slump in sales to China’s state-owned banks.
Many
fear that even if Beijing formally rolled back some of the more onerous
terms, banks would still unofficially be discouraged from purchasing
foreign equipment.
People
familiar with the meeting said the CBRC provided few details about how
they will proceed with the regulations, but there would be more thorough
consultations than used for drafting the earlier rules.
“Their
attitude and approach were good, but there’s not much optimism,” said
the individual who attended the meeting. “What matters is how the sales
numbers look.”
High-level
executives at Chinese technology companies, which could gain from a
retreat of Western rivals in China, were made aware last month that the
banking sector rules will not be dropped altogether, said a person from
one of those companies.
“No
one doubted they were going to come back,” said another of those
familiar with last week’s meeting. “We’re all still trying to wrap our
heads around it.”
China,
fearing the reach of the U.S. National Security Agency’s cyber spying
capabilities, has advanced several cyber security measures in recent
months. Respected government-affiliated experts have defended these as
reasonable and fair, noting that intense political opposition from
Capitol Hill has essentially locked out Chinese manufacturers Huawei and
ZTE from selling telecom equipment in the United States.
Still,
the banking sector regulations have been criticized by the United
States and Europe as protectionist measures that unfairly exclude
foreign products and potentially violate China’s obligations as a member
of the World Trade Organization.
CBRC
officials appeared sensitive to the criticism, saying at last week’s
meeting they had consulted China’s Ministry of Commerce and WTO experts
to ensure that its proposals would meet China’s free-trade obligations,
according to the person who attended the meeting.
Spokespeople for Microsoft
and IBM said they had no comment on the matter at this time. A Cisco
spokesman said the company “does not comment publicly on specific
customer meetings.”
