In July we hosted a lunch-and-learn about the key takeaways from China’s Anti-Foreign Sanctions Law, which expanded China’s extraterritorial reach when enforcing its laws.
On Sept. 1, China’s sweeping Data Security Law went into effect, allowing Chinese authorities to place controls on the exportation of “core state data,” or data critical to national security. China’s interpretation of “core state data” is broad, encompassing any data the government assesses as being related to China’s economic and social development, public interest or national security, as well as relating to individual Chinese citizens.
Is this the Chinese version of the European Union’s General Data Protection Regulation (GDPR)? On steroids, maybe.
The GDPR is a legal framework that sets guidelines for the collection and processing of personal information from individuals who live in the EU; it requires companies to notify visitors of its websites in a timely way if any of their personal data held by the site is breached.
While cybersecurity is a top priority for many countries, the new Chinese regulations seem to be more concerned about damaging their own national interests. Further, China also seems bent on control and ownership of the data preventing organizations from storing data outside of China, and according to the law, organizations are under no circumstances to provide data to foreign courts without prior authorization from approved state authorities.
Potential impact of China’s new regulation
Given China’s past, it is likely that leaders will use these legal authorities to compel organizations to share critical data they have collected. For U.S. companies, this means that China has the legal backing to access any of your organizational data and use it to support Chinese activities as well as Chinese-backed organizations. They are no longer doing this in secret.
Key takeaway
Organizations operating in China should keep a close eye on China’s legal framework surrounding data collection and storage, especially when the data could be pertinent to China’s national security or national interest.
About the Wisconsin Go Global Initiative:
The Wisconsin Go Global Initiative is part of the Wisconsin Small Business Development Center (SBDC) Network, hosted by the Institute for Business & Entrepreneurship in the University of Wisconsin System.
It is funded in part through a Cooperative Agreement with the U.S. Small Business Administration.
Reasonable accommodations for persons with disabilities will be made if requested at least two weeks in advance. Contact the relevant SBDC office or call 608-263-7794.
