Technology companies could face a worrisome wrinkle for their operations in China with the arrival of a law meant to combat terrorists.
China's legislature on Sunday passed what the official Xinhua news agency called the country's first counter-terrorism law, which will go into effect in January. The measure is intended to identify people and activities, including those discussed online, that threaten public and government security.
Terrorist attacks have riveted world attention in recent months, including deadly assaults in Paris, San Bernardino, California, and in Xinjiang, China.
Critics have worried that the law, with its broad definition of terrorism, could give the Chinese government cover for snooping into the operations of technology companies or ways to circumvent privacy protections in everyday gadgets such as smartphones, wireless routers and televisions. U.S. tech giants such as iPhone maker Apple (NASDAQ: AAPL) rely heavily on China-based facilities that assemble their products, while homegrown up-and-comers such as Huawei and Xiaomi are expanding their sales overseas.
Among other things, Xinhua reports that the new law requires that telecom operators and Internet service providers give "technical support and assistance, including decryption," to police and national security authorities. Despite that provision, however, it does not contain an earlier proposal that would have required telecom companies and ISPs to surrender encryption codes to Chinese authorities, according to the Wall Street Journal.
Encryption technology can obscure messages among terrorists, but it also protects the communications of political dissidents and safeguards e-commerce transactions.
Earlier this year, U.S. President Barack Obama expressed concern about the potential for China to insist on "back doors" that would bypass encryption protections in high-tech gear.
Apple shares approached midday Tuesday, up $1.04, or nearly 1%, above Monday's close, to $107.86 U.S., within a 52-week trading range of $92.00 U.S. to $134.54.
