Chinese Government Signals Softer Stance on Data Rules, Easing Regulation for Foreign Businesses
BEIJING — In a significant shift, the Chinese government is indicating a more lenient approach to data regulations, particularly for foreign businesses operating within the country. Recent moves suggest that the Chinese authorities are taking steps to ease regulation and address concerns raised by international companies.
Over the past few years, China has implemented strict control measures on data collection and export through new laws. However, the vague wording of certain terms, such as important data, has made it challenging for foreign businesses to comply and operate within the country.
In a draft update released by the Cyberspace Administration of China (CAC), it is proposed that no government oversight would be required for data exports unless the regulators specifically classify the data as important. These draft rules were made public on September 28, just before an eight-day national holiday, and are open for public comment until October 15.
The release of these draft regulations is seen as a positive signal from the Chinese government, indicating that they are listening to the concerns of businesses and are ready to take action to address them. The European Union Chamber of Commerce in China has stated that the draft regulations provide more clarity and exemptions for companies regarding cross-border data transfer and personal data protection.
The proposed changes in the draft regulations also include provisions that allow data generated during activities such as international trade, academic cooperation, manufacturing, and marketing to be sent overseas without government oversight, as long as they do not involve personal information or important data.
This change reflects a growing realization within Beijing that strict data sovereignty ideals may come at a significant economic cost. Beijing understands that multinational corporations, especially those in data-intensive industries, cannot operate effectively when faced with ambiguity and uncertainty regarding data regulations and operations.
China’s economic recovery from the COVID-19 pandemic has slowed since April, and recent raids on foreign consultancies have added further uncertainties for multinational companies. To address these challenges and improve the business environment, the Chinese State Council unveiled a 24-point plan in August aimed at supporting foreign business operations in the country. However, some foreign business sources have expressed skepticism regarding the plan, considering it largely as a reiteration of existing policies rather than substantial changes.
Data, personal information, and cybersecurity rules have been identified as major challenges by members of the U.S.-China Business Council in their latest annual survey. Improving predictability for U.S. businesses in China is crucial, and U.S. Commerce Secretary Gina Raimondo has emphasized the need for action in this regard.
While the proposed data rules represent a decrease in regulatory risks, they do not eliminate them entirely, as the term important data remains open to Beijing’s interpretation at any given time. These changes are part of a broader effort by the Chinese government to adopt a more transparent and predictable approach to technology regulation, following a crackdown on the tech sector.
Overall, the proposed changes in data export controls and other recent regulatory developments demonstrate the Chinese government’s recognition of the economic implications of their data sovereignty ideals. It remains to be seen how these proposed changes will be implemented and if further concrete actions will be taken to improve the business environment in China.
In conclusion, the Chinese government’s signals of a softer stance on data rules and regulations are generating cautious optimism among foreign businesses operating in the country. The proposed changes aim to provide more clarity and exemptions regarding cross-border data transfer and personal data protection. However, uncertainties regarding the definition of important data and Beijing’s ultimate interpretation of this term remain, reminding businesses that further regulatory risks may still exist.
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