China's cryptography law was approved by the Standing Committee of the National People's Congress, the nation's top legislature, in October. Photo: cnsphoto

A new law coming into force next week, the first of its kind in China overseeing cryptography, will be a boon for Chinese private businesses and foreign companies seeking opportunities in the commercialization of cryptography, an industry veteran said on Wednesday.

"The classification of cryptography based on usage scenarios offers a legal guarantee for the commercial cryptography sector to gain steam," Cao Yin, managing director of the Shanghai-based Digital Renaissance Foundation, told the Global Times.

It is not the case that all ciphers will be stored in a database that is managed by the state - only those involving state secrets will be strictly managed, providing sufficient leeway for the commercial use of cryptography, notably blockchain, Cao said.

The cryptography law was approved by the Standing Committee of the National People's Congress, the nation's top legislature, in October. It will go into effect on January 1, 2020.

Cryptography is classified into core, common and commercial categories, according to the new law. Cryptography falling into the core and common categories is strictly managed by the relevant authorities overseeing cryptography, while that classified as commercial cryptography involves information that doesn't belong in the category of state secrets and can be used by individuals and organizations in accordance with the law.

Those who engage in misconduct concerning cryptography such as the theft of others' encrypted information and the hacking of others' cryptography security systems will be held legally accountable, the new law stipulates. 

Foreign companies in particular will get a boost from the new law, Cao noted. 

The law states that foreign companies are encouraged to commit themselves to technological cooperation in commercial cryptography on the basis of voluntary participation in keeping to commercial principles. Administrative institutions and their employees can't force the transfer of commercial cryptography technologies.

In a sign that the industry is gearing up for the nation's first cryptography law, a new commercial cryptography industry association has been launched in South China's Guangdong Province, Chinese news portal dayoo.com reported on Tuesday.

The Guangdong provincial commercial cryptography industry association was founded on Monday in Guangzhou, capital of Guangdong Province.

The association is intended to, under the new cryptography law, push for the creation of a new security mechanism governing cyberspace that is underpinned by cryptography technologies, read the report.