Data Backup Digest

China's new cryptography law went into effect on January 1, 2020. Originally drafted in 2017, it was years before it was finally approved. But what is the purpose of their new law? More importantly, how has it affected life in China over the past few months?

The New Law

In late 2019, Chinese President Xi Jinping urged his country to embrace blockchain technology. He was speaking in front of the Political Bureau of the Central Committee in Beijing when he touted the blockchain for its potential use in everything from general business to fighting poverty across the country.

Xi Jinping was quoted as saying: "We must take the blockchain as an important breakthrough for independent innovation of core technologies. Clarify the main direction, increase investment, focus on a number of key core technologies, and accelerate the development of blockchain technology and industrial innovation."

He also announced the creation of Blockchain+, a new platform that is meant to support education, employment, food safety, and medicinal safety within China.

But the law itself does have some serious implications and repercussions. While it's ultimately meant to help Chinese officials regulate it's usage in the country, and to spur the development of their own encryption industry, the law is not without controversy.

For starters, the law divides encryption into one of three different categories: core, common, and commercial. Not only does this separate business usage from personal usage, but it's the inverse of how cryptography is usually applied.

In most cases, encryption and cryptography systems are open source products. This essentially means they are viewable by anyone and everyone. The personal key that is used to decrypt an encrypted file is therefore the most important part. Unfortunately, many people believe that China's new laws are way for the government to circumvent personal decryption keys and to eliminate every form of complete, end-to-end encryption on a personal level.

According to Article 31 of the new law, the government is free to inspect and control any cryptography systems in the country. It also gives them complete and unrestricted access to any data that is protected by such systems.

An Interesting Juxtaposition

While China's new law is quite innovative, it carries with it an interesting juxtaposition. At the time of this writing, cryptocurrencies are currently banned in China. As one of the primary uses for blockchain technology thus far has revolved around cryptocurrencies like Bitcoin, it's interesting to see the Chinese government embracing the blockchain.

However, the countrywide ban is expected to come to an end very soon. Not only are they expected to launch the DCEP, or Digital Currency Electronic Payment, which mirrors current cryptocurrencies, they are also quick to point out that they won't be able to prevent Facebook's Libra coin from reaching it's country's population.

Changchuan Mu, director of China's Research Institute on Digital Currency, was quoted as saying: "Even if Facebook is blocked in China, people will use indirect ways to purchase it from abroad once Libra comes out." He continued by saying: "No countries welcome Libra, but it might be unstoppable anyways."