The central government has encouraged companies to provide information security products, as it develops its own national security system.

A national information security system should be complete within the next five years, said officials from the Ministry of State Security Wednesday during the Information Security Executive Forum 2004.

Sheng Changxiang, from the China Academy of Engineering, said, "the impact of the knowledge economy is great, the significance of information security for a country is equal to that of its economic security and political security."

Results from the 2004 China Information Network Safety Survey show that of the 7,072 key information networks and information systems used by those surveyed, 58 percent suffered some kind of Internet security problem while 10 percent suffered huge financial losses.

According to a representative of the Ministry of Public Security's Public Information Network Security Supervisory Bureau, network security management systems remain largely unimplemented in China, and network security awareness is perilously low. Problems arising from delayed repairs and flaws in security software are rife.

Sheng said the central government is also planning to use legislation to increase information security.

Insiders said the framework of the draft law will come out by the end of 2005.

Sheng believes that besides financial support, human resources support is also important to build a national information security system.

Many officials and scholars have already suggested the central government recognize information security protection as one of the most pressing subjects it has to deal with.

In this way, more professionals can be nurtured and encouraged to work in the field.

On the other hand, there are many governmental agencies in charge of information security protection and it is important to converge the resources of these agencies in order to form a single team to protect information security.

Chen Yuehua, vice-director of Shanghai Municipal Informatization Commission, said since the late half of 2003, Shanghai has been building such a team.

Meanwhile, both officials and scholars also believe market demands of individual customers who want to protect their information are increasing very rapidly.

Market analysts believe the market potential for such products will surpass 10 billion yuan (US$1.2 billion) by the end of this year and the number of companies engaged in the sector is also growing.

Zhou Jianxun, secretary-general of Shanghai Information Security Association (SISA), said, "currently, companies that manufacture mainly products focused on information security number more than 150 and more small local companies will enter the market in the next three years."

As the association for the industrial sector, SISA will try to offer small and medium companies more services to help them grow more rapidly both in terms of investment return and technology.

(China Daily November 25, 2004)