MIIT hints at loosening restrictions on foreign tech firms for cloud services

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The Ministry of Industry and Information Technology (MIIT) of China said in a press conference Tuesday that it approved of foreign tech firms conducting cloud-computing business in China via cooperation with local firms.

“Under the premise of obeying Chinese laws and policies, foreign companies are welcomed to participate in the cloud computing market and help to boost the market,” Wen Ku, head of the MIIT information and communication department, said in the press conference.

The MIIT statement follows Premier Li Keqiang’s proposal to allow trial operations for foreign cloud-service providers. In the meeting with 36 heads of foreign corporations earlier this month, Li said China is considering a “liberalization pilot” in a free trade zone to open cloud computing to foreign companies.

Foreign cloud service providers would be allowed to build their own data centers in the free trade zone, according to the proposal.

China’s current rules on data storage and cybersecurity forbid foreign firms to provide cloud-computing services in China directly. Even though cloud giants such as Amazon, Microsoft, and IBM have businesses in China, they have to find local partners and license them to use their own technologies and run their brands. These businesses are effectively operated by their Chinese partners.

For example, Apple began transferring the iCloud accounts of its China-based customers to a local partner’s servers. Apple’s China-based customers had to agree with a new terms of use signed with the Chinese operator before they could continue using Apple’s cloud storage service.

With the new MIIT approval, foreign firms are expected to be able to set up joint ventures with local partners and conduct cloud-computing businesses. It gives foreign firms better access to China’s fast-growing cloud-computing market, but is still far from a free market.

Scott Kennedy, a China expert at the Washington-based Center for Strategic and International Studies described such practice as “making discretionary, piecemeal adjustments rather than outright liberalization,” according to the Wall Street Journal.

The announcement comes as the US-China trade war edges closer to a deal, which tries to resolve long-standing concerns about Beijing’s economic practices, including forcing American companies to turn over valuable technology as a condition of doing business in China and restricting American firms from participating in certain industries.