China May Ease Some Data Rules in Breather for Foreign Firms

 

Beijing has proposed to ease some rules targeting the flow of data from China to abroad, a move that could help calm anxiety among foreign and Chinese companies in the country who trade overseas.

The Cyberspace Administration of China (CAC) said it was looking at waiving data export security assessments for activities such as international trade, academic cooperation, cross-border manufacturing and marketing that do not contain personal information or important data.

The CAC also planned to cancel the need for data export security assessments in some cases, including for employment purposes, cross-border shopping, hotel reservations or visa processing activities as they require personal information to be transferred abroad.

 

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China’s tightening data laws have been a cause of concern for several companies over their lack of clarity and long processes.

Foreign firms have been particularly concerned about stepping over the line while dealing with Chinese regulators, amid Beijing’s crackdowns on due diligence and consultancy firms and imposition of exit bans on foreigners in the country.

European Commission Vice President Vera Jourova said last week that European businesses were particularly concerned. Jourova’s statement followed similar concerns voiced by the United States’ Commerce Secretary Gina Raimondo, who said US businesses told her that China had become uninvestible.

The US has consistently raised concerns about China’s newly-expanded counter-espionage law, that bans the transfer of any information related to national security and interests, without defining those terms. It also widens the definition of spying to include cyberattacks against state organs or critical infrastructure.

 

 

Will make foreign firms ‘very happy’

In March, Chinese regulators eased some deadline pressure on multinational companies struggling to comply with new rules requiring them to seek approval to export user data as the extensive disclosures made the target date unattainable for many.

The proposed rules are open to the public for comment until October 15.

Alex Roberts, a Shanghai-based lawyer at Linklaters, said the new rules are “a great signal for foreign investment and trade into China”.

“There will be questions about the scope of ‘necessity’ to qualify for some of the exceptions,” he said, “but I think a lot of big and small foreign companies are going to be very happy if the rules pass in the current form.”

You Yunting, a lawyer with Shanghai-based DeBund Law Offices, said the new rules “represents a certain degree of relaxation in data export regulation” in China.

He added that the new rules could keep the cross-border transfer of human resources data low for companies. The previous rules were causing consternation among international businesses in China as some fear they could be cut off from assessing their human resources data from within China.

 

• Reuters, with additional editing by Vishakha Saxena

 

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