China Adopts Controversial Cybersecurity Law

China has green-lit a sweeping and controversial law that may grant Beijing unprecedented access to foreign companies’ technology and hamstring their operations in the world’s second-largest economy, according to Bloomberg. The Cyber Security Law was passed by the Standing Committee of the National People’s Congress, China’s top legislature, and will take effect in June. Among other things, it requires internet operators to cooperate with investigations involving crime and national security, and imposes mandatory testing and certification of computer equipment. Companies must also give government investigators full access to their data if wrong-doing is suspected.

China’s grown increasingly aggressive about safeguarding its IT systems in the wake of Edward Snowden’s revelations about U.S. spying, and is intent on policing cyberspace as public discourse shifts to online forums such as Tencent’s WeChat. The fear among foreign companies is that requirements to store data locally and employ only technology deemed “secure“ means local firms gain yet another edge over foreign rivals from Microsoft to Cisco.

The decision on cybersecurity was revealed along with a raft of other announcements, including a ruling that barred a pair of elected Hong Kong localists from office and the surprise replacement of veteran official Lou Jiwei as finance minister. Companies operating on Chinese soil rarely raise public objections to domestic policy for fear of repercussions, but much is at stake in a Chinese IT market Gartner puts at $340 billion.

The draft law prompted more than 40 business groups from the U.S., Europe and Japan to pen a letter to Premier Li Keqiang this summer, arguing it would impede foreign entry and the country’s own growth. Parallel legislation governing the use of data for the insurance industry has also provoked objections. The measures are part of a sweeping push under President Xi Jinping to control China’s internet, including the passage of a security law establishing “cybersovereignty“ and making the spread of rumors and defamatory posts a crime.