China Wants US Companies To Hand Over Source Code, Use Stated-Sanctioned Encryption

It should strike no one as a surprise at this point that the US and China have a bit of a strained relationship when it comes to trust. Both have accused each other of cyber offenses, and likewise, neither has much faith in the products it sources from the other. Post-Snowden, the situation has only become worse.

That leads us to this point, where China is demanding that American companies that sell software products to Chinese banks must hand over their source code to be reviewed. And, it gets even better. China also wants these same companies to begin using Beijing-sanctioned algorithms in lieu of their preferred algorithms.

Bank Of China
Flickr: Yves Doutreligne

This all boils down to the absolute lack of trust mentioned before. China has seemingly reached a point where even encryption algorithms it has no control over cannot be trusted. Not surprisingly, US business lobbies are none too pleased, and have taken immediate action to prevent the new rules from being put into action.

China's demands are downright outrageous, and if this rule is in fact put into place, it's hard to say exactly how things are going to play out. No company is going to be willing to hand over its intellectual property just because it's asked; in some cases it'd just be better to depart the country. Given China's other recent actions, it no doubt would prefer that to happen. To China, it sometimes makes sense to reinvent the wheel because those who invented it first cannot be trusted.

Nonetheless, we'll have to wait and see what becomes of this, and fortunately, it doesn't seem like that wait will be too long.