BEIJING—Ahead of Chinese President Xi Jinping’s U.S. visit, 19 American business and technology industry groups have asked President Barack Obama to urge Beijing not to use cybersecurity measures to protect its domestic technology industry from foreign competition.
The move reflects anxiety among U.S. businesses that they may be strong-armed into complying with unfavorable rules set by China’s national security agenda or be pushed out of a major market.
In a joint letter sent to the White House on Tuesday and reviewed by The Wall Street Journal, the groups said China was increasingly pursuing policies that hurt foreign firms’ ability to do business, and raised questions about China’s commitment to free trade. Examples they cited included a new national security law, restrictions on the flow of data, and draft legislation on counterterrorism and cybersecurity, according to the letter.
The letter asks Mr. Obama to press the point with Mr. Xi when the Chinese leader visits the U.S. late next month.
The businesses’ concerns about China’s cybersecurity initiatives center on proposed requirements that technology vendors subject their network security equipment to third-party audits or hand over source codes and encryption keys. Some of the Chinese government’s moves have also sought to restrict the flow of data out of the country, creating challenges for multinational businesses that need data to flow unhindered across borders.
Concerns about such data restrictions were raised again in July after China released a draft cybersecurity law that aims to tighten controls over the Internet while protecting Chinese users’ data. The American Chamber of Commerce in China, which declined to comment on Tuesday’s letter to Obama, had said on Monday that the draft cybersecurity law was too vague, overly broad and could undermine global trade. The group’s chairman, James Zimmerman, urged the government to “ensure that national security standards are in line with international standards and are transparently developed with equal access for foreign companies.”
China ratcheted up cybersecurity initiatives after former U.S. security contractor Edward Snowden said U.S. intelligence agencies were using technology companies to spy on foreign governments. But some of its measures have drawn protests from foreign technology and business groups, who said the moves were designed to block foreign vendors in favor of domestic companies.
China’s foreign ministry said it wasn’t aware of the letter. China’s cabinet and the Cyberspace Administration of China, the country’s top Internet regulator, didn’t immediately respond to faxed requests for comment. The U.S. Embassy in Beijing didn’t immediately respond to a request for comment.
“There needs to be a change in the status quo where the two countries can come together and start to dialogue on some of these issues in order to try to change the situation,” said a member of U.S. business community familiar with the letter’s contents. “The current status quo has led to a deteriorating political environment that also hurts the abilities of companies to operate.”
The U.S. business groups also hope to reflect that cybersecurity issues are affecting not only technology companies but a broad swath of other sectors that use foreign technology, according to people familiar with the content. “It’s reinforcement that cybersecurity issues are affecting everyone’s businesses in China,” the person said.
Signatories include the U.S. chambers of commerce in the U.S. and China, the Business Software Alliance, the Coalition of Services Industries, and the Computing Technology Industry Association.
The groups said they hoped Mr. Obama would seek from both sides a commitment to open markets and agreement that cybersecurity measures are narrow in scope and the least restrictive to trade as possible.
Mr. Obama already plans to raise concerns about cybersecurity issues in September when Mr. Xi visits the U.S. The letter comes as the Obama administration has been reeling from the theft of millions of personnel records from the Office of Personnel Management—a massive computer attack that U.S. officials have blamed on China. Ahead of bilateral talks in June, the administration pledged to raise the issue at every level.
The Chinese suspended a separate track of cybersecurity talks a year ago after the U.S. charged five Chinese military officers with hacking, but in June both sides said they had agreed to launch a working group to share concerns.
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