Chinas Initiative to Streamline One of the Key Challenges for International Businesses

Last Updated on October 7, 2023 by Robert C. Hoopes

Chinese authorities are considering a softer approach to data rules, specifically for foreign businesses, in an effort to ease regulation. The Cyberspace Administration of China (CAC) has proposed an update stating that government oversight will only be required for data exports that are specified as “important.” This proposed change comes as a response to concerns raised by foreign businesses about compliance difficulties due to vague terminology in the rules.

The EU Chamber of Commerce in China has welcomed the draft regulation, seeing it as a positive step towards relieving companies of challenges in cross-border data transfer and personal information protection. The proposed rules have a public comment period that will close on October 15.

The draft regulations also exempt data generated during international trade, academic cooperation, manufacturing, and marketing from government oversight, as long as they do not contain personal information or “important data.” This exemption is seen as part of the Chinese government’s commitment to facilitating cross-border data flows and improving the investment climate. It acknowledges the economic costs associated with data sovereignty ideals and recognizes the need for multinational corporations, particularly in data-intensive industries, to have clarity on the definition of “important data” to avoid disruptions.

However, concerns remain as the concept of “important data” remains undefined and subject to Beijing’s determination. Despite this, the draft regulations align with the State Council’s 24-point plan released in August, which aims for free data flows and includes measures to enhance the business environment. The proposed changes also follow recent easing of regulations in other areas, such as artificial intelligence, allowing Chinese companies to launch generative AI chatbots to the public.

Overall, these proposed updates to data rules show a more accommodating stance by Chinese authorities towards foreign businesses and a willingness to address their concerns. However, the lack of clarity surrounding “important data” raises uncertainties about the regulatory environment in China.