Foreign trade groups urge suspension of regulation
China's foreign ministry on Tuesday said China is amending the new bank information technology rules and called for understanding of and respect for the country's efforts to strengthen banking security, after several foreign trade groups urged China to suspend the rules.
"Chinese authorities are amending the rules after seeking advice from various parties," foreign ministry spokesman Hong Lei told a regular press briefing on Tuesday. "It is very necessary to promote information security in the banking industry, and many countries have released laws and rules that aim to enhance Internet and information security."
The China Banking Regulatory Commission (CBRC), the top banking regulator, released a guideline to strengthen the banking industry's information security in September 2014, requiring banks to procure "secure and controllable information and communications technology (ICT) products and services" for up to 75 percent of their systems by 2019.
The move has raised concerns from some foreign trade associations, who said that it could close the door for many foreign IT companies such as IBM, Oracle and EMC to the Chinese banking IT market.
"We hope related parties can understand and respect China's efforts at strengthening the IT products' security in the banking industry," Hong said, adding that China will not change its opening-up policy and commitment to implementing WTO rules.
A total of 31 trade associations, including the US Chamber of Commerce, the European Services Forum and the Japan Chamber of Commerce, on Monday urged the Chinese authority to suspend bank information technology rules that were implemented on April 1.
The trade associations claimed that the rules "discriminate against" foreign providers of Internet and ICT products, solutions and services, Reuters reported, citing a joint open letter written by these trade groups to China's Office of the Central Leading Group for Cyberspace Affairs.
This is not the first time that foreign companies have pressured China on the issue. US officials held high-level discussions with their Chinese counterparts over the banking rules in the past months, after 18 US trade groups asked China to postpone the regulation.
"The banking industry is the most important sector for foreign IT companies' sales revenue in China, which is why they have reacted so fiercely," Cao Yujie, consultant director at Beijing-based IT market research firm CCW Research, told the Global Times on Tuesday.
Data from IT consultancy IDC shows China's banking IT market will be worth more than 18 billion euros ($19.1 billion) by 2017.
A senior US Treasury official said on March 30 that China had agreed to suspend implementation of the rules. But the groups - which include organizations representing companies like Apple, IBM, Microsoft, Oracle, and Google - said banks were continuing to implement the rules, Reuters reported.
The CBRC said in a statement on February 12 that the new rules will apply equally to all companies regardless of national origin.
The CBRC also alleviated the concerns of foreign IT companies by stating that it is still considering whether to ask ICT suppliers to file their software source codes, which will be implemented after consultations, according to the statement.
"Foreign suppliers have concerns that turning over source codes will put their intellectual property at risk," Cao said. "But from the banks' viewpoint, filing source codes could help them minimize potential risks if they encounter information security problems in the future."
Bai Ming, a research fellow with the Chinese Academy of International Trade and Economic Cooperation, said ensuring cyber security is the banking industry's priority.
"Cyber security in the banking industry not only concerns depositors' interests but the country's financial security as well," he told the Global Times Tuesday.
"Many countries have adopted similar approaches to the issue."
The 31 trade associations said on Monday that they were also concerned about similar initiatives in the telecommunications sector.
"If implemented in other sectors, these policies would threaten the ability of European IT companies to participate in the overall ICT market worth 411 billion euros in China," the European Services Forum said in a separate letter released on February 25.
Xiang Ligang, CEO of telecom industry information portal cctime.com, told the Global Times Tuesday that foreign trade groups are overestimating the impact of a similar initiative on the telecom sector.
"The telecom industry's reliance on foreign technology is not as much as the banking industry's," he said. "Purchases from foreign suppliers only account for less than a quarter of the total market, due to the high competitiveness of domestic rivals such as Huawei."
