China’s new national security law is causing consternation throughout the global technology industry.

“New language in the rules calls for a ‘national security review’ of the technology industry — including network and other products and services — and foreign investment. The law also calls for technology that supports key sectors to be ‘secure and controllable,’ a catchphrase that multinationals and industry groups say could be used to force companies to build so-called back doors — which allow third-party access to systems — provide encryption keys or even hand over source code,” wrote The New York Times.

“As with many Chinese laws, the language is vague enough to make it unclear how the law will be enforced, but it suggests a new front in the wider clash between China and the United States over online security and technology policy,” said the Times.

The technology industry is already upset at Chinese efforts to get them to transfer technology to Chinese firms. Many have come flat out and accused the government and Chinese firms of stealing intellectual property. Last month, some US officials implied that China was behind a recent hacking incident that stole data on government employees from a US agency.

China has a different take on the cybersecurity issue. After Edward Snowden’s release of documents on US espionage, China countered that it has much to fear from foreign technology that could have been tampered with by the US government.

Asia Unhedged worries that allegations of Chinese hacking and criticism of the new national security law may derail pending agreements with China that offer US tech firms much bigger opportunities in the world’s second largest economy.

“The popular US posture when determining how to approach trade and investment issues with China is to focus on grievances,” wrote Manisha Singh, an international lawyer and former Deputy Assistant Secretary at the US Department of State, in Forbes. “Because of this, we often overlook avenues that could provide our companies and workers with greater access to one of the world’s largest consumer markets. The pending Bilateral Investment Treaty would give American companies the ability to operate more effectively and be treated fairly in the Chinese market.”

Grievances about China’s new national security law and alleged hacking are one thing and should be addressed. But Asia Unhedged wonders if all this is worth scuttling the BIT currently being negotiated by China and the US.

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