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The People's Republic has softened its previously Draconian stance on encryption products with the announcement of a substantial and welcome list of exceptions, Reuters reports. The Chinese State Encryption Management Commission sent a "clarification" letter to U.S. business organizations last week easing the position it took in late January which required all business and private users to register products with encryption capabilities. The original scheme would have banned foreign made crypto-enabled products and required everyone to apply for permission to use those available domestically. But the government has given it a bit of a re-think, probably inspired by threats that foreign investment revenues would dry up in response to fears of trade-secret piracy on a mass scale. Now, the restrictions will affect only "specialized hardware and software for which encryption and decoding operations are core functions," the letter says. "Other products, including wireless telephones, Windows software, browser software, etc., are not included," it said. China "will not carry out encryption key trusteeship of foreign encryption products and equipment containing encryption technology," it said. "Foreign businesses do not need to be worried about this point." The announcement is not surprising. The PRC government had already approved the sale of Windows 2000, which includes strong cryptographic capabilities, to the ten or twenty percent of Chinese who have not already bought the cracked, pirated versions which have been available in shopping centres throughout the Republic for months. ®

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