USITO Weekly 9/4/2009: Telecom Network Security Rules

MIIT to Release Telecom Network Security Rules

The Ministry of Industry and Information Technology (MIIT) announced on August 18 that it will publish the Administrative Measures for Assurance and Supervision of Communication Network Security (draft for comments), in order to tighten the management over communication network security.

Under the new rules, communication network operators and Internet domain name service providers will be subject to a disciplinary warning or fines of no more than RMB 30,000 (USD 4,411) in case they fail to go through registration formalities or significant security flaws are found. In addition, public communication networks, Internet networks operated by telecom carriers as well as Internet domain name service providers shall be equipped with network security assurance measures. The organizations operating networks shall classify their networks in operation into different protection levels, i.e., the five security levels between level 1 through level 5, per their respective importance to the national security, social stability and economic development. MIIT will assign tasks to its provincial branches to perform direction, coordination and supervision works on each province’s classification work.

The Measures states that the purpose of publishing the Measures is to “prevent jam, interruption, breakdown or illegal control of communication networks, and loss, leakage or unauthorized modification of data when transmitted, stored or processed in communication networks”. The ministry said that it would keep soliciting comments from the society from August 18 to September 4, after which it will "find a suitable time" to officially release the rules to the public. According to a notice issued by MIIT, the draft rules were drafted by the Policy and Regulations Department of MIIT, interested parties are welcome to feed back to the department via wangxiaofei@miit.gov.cn.

USITO Notes: The drafting of this new regulation should come as no surprise as network and cyber security have been gaining importance in China. In reality, the former MII as early back as 2006, published a number of similar regulations and standards stating that all telecom networks must carry out multiple-level security protection of their networks, similar to the MLPS regime being promoted by the Ministry of Public Security (MPS). Thus, MIIT appears to be under pressure from MPS to further implement the MLPS regime, but with enough leeway to use their own telecom-specific technical measures during the implementation process.

Additionally, earlier this year MIIT published new telecom security regulations to help prevent, identify, and manage DDOS attacks over the network, which signals the Chinese governments resolve to protect and sustain the telecom networks. This is especially important with several high-profile security incidents taking place this year in which multiple provincial backbone networks were taken offline due to malicious attacks. USITO is actively following these measures, and most likely this fall will have increased dialogue with the relevant security agencies on this matter. Please contact jimmy@usito.org for questions.

EUCCC: Chinese Protectionist Measures Stifles Overseas Firms' Business

On September 2, the European Union Chamber of Commerce in China (EUCCC) released its European Business in China Position Paper 2009, as one of the nine annual position papers released by EUCCC. The Chamber said the Paper was based upon surveys of 1,400 member companies. Noteworthy messages included:
1. The Paper first agrees on the progresses made by China's ongoing economic reforms.
2. There are signs of "increasing threat of protectionism", since European enterprises are increasingly feeling so from the government when doing business in the country.
3. European firms now face mainly three kinds of challenges, including market access, transparency of legislation, and Intellectual Property Rights (IPR).
4. The lack of transparency in legislation and implementation, has been one of the major obstacle facing European businesses in China.
5. There are not enough explanation and analysis when the government announces important decisions and key cases. The Paper calls for actions to build "predictable, transparent and fair business environment for all, since such actions would "strengthen confidence from the European companies and also boost domestic consumption".

USITO Notes: Actually most of the points listed above were not new issues, in previous such papers released by the chamber, there were traces of similar points. However, it seems that this year the "protectionism" issue was especially highlighted, as this word was captioned in most media reports shortly after the paper release. The topic appears a sensitive one given this year's world economic situation, the chamber's tone would be sending a strong discouraging message to European companies operating or planning to operate in China. In the Chinese side, the Commerce Ministry immediately rebuffed the criticism, with its statement to the press at the next day that "China keeps trying hard to create an open and good environment for all foreign companies". Despite episodes like such, China would continue to be an attractive destination, and this is beneficial for both sides. Like anywhere else, industry outcries are not just complaining, instead they are intended to ask the government calibrate its policies to ensure a sustainable bilateral trade development.

MIIT: Notice of Further Strengthening Technology Innovation Work

On 9/2/2009, the Ministry of Industry and Information Technology (MIIT) released in its website the “Notice of Further Strengthening Technology Innovation Work”. It states that in order to cope with the financial crisis and improve the core competitiveness of China's technology sector, six measures shall be counted on:

1. Fully realize the importance of strengthening technology innovation.
2. Strengthen the formulation work of technology innovation strategies, plans and policies, thus enhance policy support and increase the investment to technology innovation.
3. Accelerate the construction of technology innovation system. Make the enterprises become the mainstay of the country's innovation drive, build a market-oriented innovation system.
4. Accelerate the process of adopting hi-tech to reconstruct and improve the traditional industries. Focus on the ten industrial rejuvenation plans and break the bottleneck of core technologies.
5. Actively push the conversion of hi-tech and S&T achievements. Leverage the hi-tech development to the industrial structure adjustment.
6. Enforce the implementation and strengthen the direction and supervision work.

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