The final text of the Encryption Law clearly represents a step in the right direction in terms of putting in place a comprehensive law in the encryption field, a sensitive and highly regulated area which China closely associates with state secrecy, and which historically has caused foreign investors great confusion with its strange mix of legislation that said one thing and policies that said another.
The final text is the first time that China has brought the previous lower-level legislation together in a law, and encouragingly appears to show that China is listening to some of the concerns expressed in comments on the prior drafts in that it no longer requires telecommunication operators and Internet content providers to provide the Chinese government with decryption support. Progress has also been made in terms of defining which products are regulated and which products do or do not require an import permit.
Whether it represents a true breakthrough in terms of market entry by foreign-players is likely to only play out in subsequent implementing legislation and practice when the full meaning of the provision on equal treatment of domestic and foreign-invested commercial encryption operators set out in the new law will be revealed.
To read Hogan Lovells’ The grand “finale” of China’s Encryption Law, click here.