Data Security Law of the People's Republic of China
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In 2018, the United States adopted the CLOUD Act, which allows United States law enforcement to obtain data stored by United States-based companies outside of the United States. Numerous countries responded with measures to keep data located in their own borders. In China, the Data Security Law was part of the response to the extraterritorial reach of the CLOUD Act or similar foreign laws.
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Provisions
The Data Security Law classifies data into different categories and establishes corresponding levels of protection. The law protects core data with data localization requirements, and broadly defines core data to include data related to national and economic security, citizens' welfare, significant public interests, and important data. The Data Security Law mandates that data transfer to foreign law enforcement or judicial agencies requires official approval.
In addition, foreign judicial authorities are prohibited from requesting data on Chinese citizens without first seeking permission from Chinese authorities.
Article 36: The competent authorities of the PRC are to handle foreign justice or law enforcement institution requests for the provision of data, according to relevant laws and treaties or agreements concluded or participated in by the PRC, or in accordance with the principle of equality and reciprocity. Domestic organizations and individuals must not provide data stored within the mainland territory of the PRC to the justice or law enforcement institutions of foreign countries without the approval of the competent authorities of the PRC.
On September 28, 2023, the Cyberspace Administration of China (CAC) issued the draft Provisions on the Regulation and Promotion of Cross-Border Data Flows. In the draft, CAC stated no government oversight is needed for data exports if regulators haven't stipulated that it qualifies as “important.”
Reactions
Carolyn Bigg of law firms DLA Piper Hong Kong stated that the law represents: “another important piece in the overall data protection regulatory jigsaw in China”, making it: “complex" and "increasingly onerous" for international businesses to navigate through. Chinese technology company stocks fell in reaction to the passing of the law while tech companies such as Meituan, Alibaba and Ant Financial were all placed under regulatory scrutiny prior to its passing. The law is seen to have wide-ranging implications and is seen as another step in the increasing lawfare between China and the United States in areas of trade, intellectual property and national security since the beginning of the US-China trade war which began in 2016.