Fortifying the Stolen – China’s New Export Control Law

After massive and global espionage, China has embarked on a ‘Export Control Regime” and rightly so, they know the best loopholes in protecting their (Stolen) IP. It took the developing world a whopping century or over to arrive technological maturity where we are. I can’t believe, how China has achieved a global competitive excellence in 30 years.

Of course, we all know the espionage and IP violations that have been underway in building a parallel economy. The new Chinese Export Control Laws are a validation of collective act over the last few decades. This blogs goes into the details of the law as well as the rationale and spirit behind the law. (Blog runs in 1100 words, reading time 4-5 minutes). References are cited at the end of the blog.

Fortifying the Stolen

A thieve knows best how to solve a riddle of a theft. That’s an age-old saying. In Cybersecurity, while designing a solution for the enterprises, I always recommend building a design on the principles of anticipating intrusions and attacks and fortifying the design. 

After indulging in massive intellectual thefts and global espionage China is well aware of weaknesses and the modus operandi. For those who are not aware, let me cite a recent example of a Chinese student at Duke University, who stole her professor’s research and started a company (product business) in China. She is not alone. The US and the western world is inundated with such stories. Even the most secretly developed weapons by the US are part of the espionage. If you recollect, the US and India to have suspended or removed the Chinese Philosophical Centers, Confucius Center after finding out that those are indulging in espionage and intellectual theft. It is said that China has over 50 million workers overseas who regularly send pirated information. Ideally, if I have to learn cybersecurity, I should avoid Lockheed Martin’s “Kill Chain” and focus on the ‘mechanism of Chinese gargantuan machinery of IP theft protection’, aka Chinese Export Control Laws cited below. It offers several Confusion (deep and reflective) thinking on the nature of the future defense. The world has a lot to learn as well are significantly lagging behind. 

On October 17, 2020, China passed a law restricting the exports of sensitive items based on national security grounds, and the law emboldens China to take countermeasures against any country or region that abuses export-control measures and poses a threat to their national security and interests. Each of these words are full of interpretations and an imminent threat to any country. All China has to do is establish a reason, and in their political culture, it is not difficult to concoct a case. If I guess rightly, even this blog is subject to Chinese national security. 

The Huawei Rejection

Why was Huawei’s 5G rejected by the advanced world? The core reason being it would have given unfettered access to their network defense and collective defense, in addition, it would have created a threat to almost all electronic data flow (that includes cell phone data too). The new Chinese regulations could prove similar to US export controls on strategic technologies. Those controls, covering military equipment, some encryption technologies, and some dual-use products, have long irked China. Chinese negotiators have often claimed that their trade surplus could be trimmed if the US would relax controls on high-tech goods.

Technologies within the Ambit

A total of 17 industrial sectors fall within the ambit of Chinese Export Control Law. The focus is primarily on technologies of strategic and commercial significance such as:

  1. Pharmaceutical and biotechnology manufacturing including technologies required for the development of vaccines;
  2. 2. Technology relating to the development, testing, and maintenance of machine tools;
  3. ‘strategic’ new product design technology for heavy machinery;
  4. Unmanned aerial vehicle technology
  5. Speech synthesis technology;
  6. Artificial intelligence interaction and interface technology;
  7. Voice evaluation technology;
  8. Personalized information push service technology based on data analysis techniques;
  9. Cryptographic chip design and implementation technology; and
  10. Quantum encryption technology

What would China bind the technology statutory regulations? According to William Marshall, an authority in this sphere, “Order 709 imposes control over the transfer of technology from within China to outside of China whether by trade, investment, or economic and technical cooperation. The regulation purports to control all transfers of technology regardless of the type of technology or whether the technology is permitted, restricted, or strictly prohibited. For permitted technology exports, a simple recordal process is required, which recordal is made with the local bureau of commerce under MOFCOM with jurisdiction over the location where the requesting entity is established. Restricted exports are subject to a license requirement, which will also be applied for and obtained from the same commercial bureau”.

The Trump initiated trade war has its roots long back into intellectual property rights and artificial currency conversion. We mock Trump for the theatrics and the tweets, but he was the most appropriate answer to China, where civilization and democracy do not work, or rather is thrown out of the window and the state-controlled capitalism is under the guise of evolved communism. 

The Great Wall of China – Importance of Chinese Export Laws

To an academician, those practicing cybersecurity and those building fortresses to safeguard their IP and enterprises, these Chinese Export Control laws are very critical. Of course, reading those at face value may reveal little but understanding the rationale and eventually reverse engineering a solution based on the bits snd pieces of these new statutes, will unravel a new mechanism for protecting this world from any further Chinese intrusion. The later we go, the more the loss. Let’s call this the “Great Wall of China”. 

What do the Chinese Export Control Laws Look Like?

Encryption and Dual-Use technologies are a facade to mimic the US Export Control Regime. However, the law goes deeper than what it reads. Items are approved for export depend on eight criteria: national security and interests, international obligations and external commitments, the type of export, the sensitivity of controlled items, the countries or regions they are intended for, the end-users and end-use, relevant credit records of exporting companies, and other factors stipulated by laws and administrative regulations. 

Are the Chinese People Different than the CPC State Machinery?

I trust their genetic legacy of wall building, of oppression from the opium war and lessons of poverty, and in the last 70 years, the submission of liberal views to state-sponsored thinking only. 

In my view, not all Chinese are like the CPC of China. Of course, like any population, the principles apply here too, that means 3 standard deviations are people like us, that almost cover over 95%, the outliers on either side exists as well, 1-2% extremely good and 1-2% with malfeasance and occult and passive/aggression. The worst, I believe, CPC is comprised of the latter and CPC offers them the avenue and a podium to run such a wonderful country and people. If I guess it right, CPC has, in the guise of national agenda, has hijacked the state. Can we call this as the ’21st Century’s Great Wall of China’?

References:

China’s export control law to become ‘key dynamic’ in US relations; https://asia.nikkei.com/Economy/China-s-export-control-law-to-become-key-dynamic-in-US-relations

https://www.taiwannews.com.tw/en/news/4033061

https://www.ft.com/content/47562fd6-89f6-11e9-a1c1-51bf8f989972

https://www.tiangandpartners.com/en/contacts/william-marshall.html

https://merics.org/en/report/export-controls-and-us-china-tech-war

https://www.pwc.com/m1/en/services/tax/customs-international-trade/china-proposed-export-control-law-june-july-2018.html

https://ccdcoe.org/library/publications/huawei-5g-and-china-as-a-security-threat/

https://asia.nikkei.com/Spotlight/Huawei-crackdown/Huawei-5G-dominance-threatened-in-Southeast-Asia

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