By ALEXA OLESEN
(Virtual China News -- Mar. 14) Chinese officials reversed strict regulations regarding encryption in a letter issued to foreign businesses this week. As a result, products such as Windows 2000, Internet browsers, and wireless telephones will no longer need to register their encryption algorithms with the Chinese government.
On January 31 of this year, the "Regulation of Commercial Encryption Codes" took effect requiring all foreign and domestic firms or individuals using encryption technology to register with the government. Any foreign or domestic products containing encryption technology were also required to have the approval of the Chinese government.
Now, the regulations "only limit specialized hardware and software for which encryption and decoding operations are core functions," said the letter from the State Encryption Management Commission (SEMC).
"Other products, including wireless telephones, Windows software, browser software, etc., are not included in the scope," the clarification letter stated.
The government circular added that foreign companies would not be required to participate in a key escrow system that would have forced companies to essentially hand over their encryption keys or algorithms to the mainland government.
"Foreign business do not need to be worried about this point," the circular stated.
The reversal, which came in the form of a four point circular, followed agressive lobbying efforts by U.S. trade officials and businesses to see the Jan. 31 regulations removed. The regulations greatly hindered foreign businesses seeking to enter the Chinese e-commerce market, a sector which depends on reliable encryption, secure software developers, and mobile phone networkers and manufacturers. One particularly hard hit company was Washington-based software giant Microsoft which was forced to delay the launch of its new operating system Windows 2000 in China because of its embedded encryption.
The regulations, which sought to protect mainland encryption software developers by limiting overseas competition and gave greater powers to Chinese security to monitor e-mail, mobile phone conversations and other digitized data sent over networks that can be encrypted. Despite assurances by the Chinese government that the regulations would "not affect the pace of foreign companies entering China" the regulations were clearly an impediment to foreign businesses in China.
Earlier this month Ambassador Prueher made comments indicating that the regulations would not be allowed under the terms of China's anticipated accession tot he WTO later this year.
"Clearly, in our view, those encryption restrictions will not be permissible under WTO," Prueher said.
