China hopes cryptography law will provide security and profitability

China’s legislature passed a cryptography law on Saturday aimed at safeguarding national security while continuing to promote a rapidly growing encryption industry.

The cryptography law was endorsed by the Standing Committee of the 13th National People’s Congress and will take effect on January 1, 2020, after years of lobbying and public debate.

The law comes at a time when rivalry between China and the US is heating up in areas relating to cryptography, and just a day after President Xi Jinping urged the country to accelerate development of blockchain technologies.

“Cryptography is an important strategic resource for a country,” an official with the State Cryptography Administration was reported to have said by news agency Xinhua on Sunday. “It’s directly related to the country’s political security, economic security, national defence security and information security,” the official added.

According to the law, China’s codes will be categorised into two groups – “core and common codes” that are handled by the state and “commercial code” that can be developed and applied for profit.

In particular, the law stipulates that all business entities, including foreign funded enterprises, should be treated equally in “study, development, production, sales, service and trade” of commercial codes. “Administrations and its employees shall not force transfer of commercial cryptography technologies,” the law stipulates.