Martin Chorzempa and Samm Sacks, senior fellows at the Peterson Institute for International Economics and Yale Law School, respectively, have authored an article discussing China's new rulebook on data regulation. The authors argue that these new regulations could benefit businesses and suggest President Xi Jinping's commitment to supporting the private sector, even at the potential cost of reduced state control in a crucial security area.
According to Chorzempa and Sacks, China has introduced draft rules that could relax its stringent data regulations, signaling a shift toward a more business-friendly approach. This comes at a time when China is facing economic challenges, including slowing growth and decreasing foreign investment. Scholars have attributed these challenges to President Xi Jinping's prioritization of data security and technology regulations, potentially at the expense of economic growth.
Multinational companies operating in China heavily rely on transferring data out of the country to efficiently run their operations, particularly in areas like customer management, payroll, and global cybersecurity. However, they have been in conflict with Chinese authorities promoting "data localization" policies that restrict data from leaving the country. This ongoing debate has seen pro-business advocates and security hardliners clash over data control, with the hardliners gaining influence in recent years, making data transfers more challenging.
The authors highlight that China's Cyberspace Administration's proposal to relax data regulations aligns with rumors of Premier Li Qiang pushing for these changes. If implemented, the new rules would reduce the burden on companies to localize their data and streamline security assessments. The proposed changes include eliminating prior approval for certain data transfers, easing requirements for "important data," and lifting pre-approval conditions for specific types of personal data transfers. While these new draft regulations offer some relief, they do not completely eliminate data regulatory risks, particularly regarding the definition of "important data."
Overall, Chorzempa and Sacks argue that these changes in China's data regulations indicate some responsiveness to business concerns and a potential shift in favor of economic growth. However, the future of China's data policies remains uncertain.
