China’s 400,000 strong hacking community is costing the nation an estimated $15 bn a year
China has passed a controversial, stringent new cybersecurity law to counter cyberterrorism despite strong opposition and serious concerns from foreign businesses and rights groups iStock

China has passed a controversial, stringent new cybersecurity law on Monday (7 November) aimed at tackling hacking and terrorism. Passed by the Standing Committee of the National People's Congress, the legislation has triggered serious concerns and opposition from foreign businesses and rights groups.

According to the new law, various sectors included in China's "critical infrastructure" such as telecommunications, energy, finance, and information services will have to undergo national security checks, store personal information and important business data in China and provide "technical support" to police and security agencies. However, the legislation reportedly does not provide details on what the security reviews will potentially entail.

Chairman of the American Chamber of Commerce in China James Zimmerman described the controversial sections of the law as "vague, ambiguous and subject to broad interpretation by regulatory authorities," Reuters reports.

As per the cybersecurity law, companies that store or provide internet data abroad without prior approval could have their businesses suspended or their business licences revoked, the South China Morning Post reports.

The law also calls for a range of companies to censor "prohibited information," restrict online anonymity and prohibit the use of the internet to "endanger national security, advocate terrorism or extremism, propagate ethnic hatred and discrimination". Besides, it bars them from "overthrowing the socialist system" and "spreading false information to disturb economic order." It also bans people from using the internet to "incite separatism or damage national unity."

While foreign companies have warned that the law could potentially harm the country's business and trade, Chinese officials maintain that the new legislation is crucial in dealing with the consistently rising threat of online cyberattacks.

"China is an internet power and as one of the countries that faces the greatest internet security risks, it urgently needs to establish and perfect network security legal systems," committee official Yang Heqing said, Reuters reports.

In August, a coalition of more than 40 business groups from the US, Europe and Asia sent a letter to China's top economic official Premier Li Keqiang, calling for the law to be amended. However, the controversial sections were still included in the legislation passed this week.

"Despite widespread international concern from corporations and rights advocates for more than a year, Chinese authorities pressed ahead with this restrictive law without making meaningful changes," Sophie Richardson, China director at Human Rights Watch, said in a statement. "The already heavily censored Internet in China needs more freedom, not less."

The law is set to go into effect in June 2017.