Intel has finally weighed in on the Chinese proprietary Wi-Fi encryption mechanism, saying it won't build products using the method: Last year, the Chinese government said that only Wi-Fi gear that uses its own security technology would be allowed in the country. Foreign companies that want to build products with the mechanism must partner with Chinese companies that have been offered rights to the technology. Intel said that it won't develop chips based on the Chinese standard because it can't come up with an appropriate solution that meets Intel's quality standards while following the standard. That reasoning is a bit weak but still, it's significant that this huge chipmaker which has planted a major stake in the worldwide Wi-Fi market has cast its vote against the Chinese plan.
Apparently China is Intel's biggest market after the United States so this is a bold move for Intel. A company spokesperson in this story says Intel hopes to find a solution to this dispute so that it can make products to sell to the Chinese market. I'm hopeful that Intel's move combined with letters recently sent to China from the U.S government and other comments from vendors will ultimately pressure China to change its tune. Other reports show that U.S. officials haven't ruled out an official World Trade Organization complaint if negotiations don't change the Chinese plan.
The Chinese system isn't necessarily better or worse than WPA and 802.11i (WPA2); in fact, we haven't seen any reports detailing how the proprietary system works or compares to other method. Further, China has shown at every technology turn their interest in controlling or having access to encryption systems, which means that the Chinese Wi-Fi security standard almost certainly includes a government backdoor.