With Sino-American trade tensions escalating, China's cybersecurity standards could be used as an "invisible tool" of retaliation against Washington's tariffs, according to one expert.
Those so-called standards are government-issued guidelines about things like firewalls and software that are technically voluntary, but are oftentimes treated as mandatory by foreign firms' Chinese business partners. Over the past several years, Beijing has issued close to 300 new national standards, Washington-based think tank the Center for Strategic and International Studies said in a report earlier this month.
Those additions are contributing to China becoming an increasingly difficult market for some firms, the report said, explaining that the new standards could potentially hit foreign-owned firms with unforeseen costs and delays for operating in China — or they could even lead to companies shutting down their Chinese businesses.
Now, there's some concern that Beijing would use its standards regime to retaliate against the U.S. as the countries exchange salvos in their trade war.
And, if Asia's largest economy were to weaponize tech guidelines to hit American companies, the cost would be difficult to quantify, but the effects on foreign firms could long outlive current tensions, according to the report.
That is, cybersecurity standards, unlike tariffs, are less likely to be softened by Beijing when the trade war is eventually brought to a close. That's in part due to Chinese President Xi Jinping's ongoing drive to increase his country's cyber power: Although the new standards could be spurred by the trade spat, "this is much bigger than the dynamic with the U.S." Samm Sacks, CSIS senior fellow and one of the authors of the think tank's report, told CNBC.
CSIS's warning about the "unwritten" rules came as China responded to American tariffs by announcing a 25 percent charge on $16 billion worth of U.S. goods — Beijing's latest move in an escalating battle between the world's two largest economies.
The Chinese have been strategic and coordinated in their responses to the U.S. so far, Sacks said, so it is likely that Beijing will seek to counter American tariffs through an "invisible tool" like its cybersecurity standards.