China to Ease Key Barrier for Foreign Businesses

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Chinese authorities have recently indicated a more lenient approach to stringent data regulations, reflecting a broader trend of regulatory easing, especially for foreign businesses. Over the past few years, China has tightened control over data collection and export through new laws, posing challenges for businesses in terms of compliance and operations, partly due to ambiguous terminology such as “important data.”

In a proposed update, the Cyberspace Administration of China (CAC) announced that data exports would not require government oversight if they do not fall under the category of “important data,” a notable shift outlined in the draft rules released in late September. The public comment period for these rules is scheduled to close on October 15.

The European Union Chamber of Commerce in China welcomed the proposed changes, emphasizing that the new regulations could alleviate some of the challenges associated with cross-border data transfer and personal information protection. The proposed rules also offer exemptions for data generated during international trade, academic cooperation, manufacturing, and marketing, allowing such data to be sent overseas without government oversight, provided they do not include personal information or “important data.”

The proposed changes appear to reflect Beijing’s acknowledgment of the economic costs associated with strict data sovereignty principles, as well as the need to provide more regulatory clarity for businesses, particularly those in data-intensive industries. While the draft rules are seen as a positive step, concerns remain about the lack of a clear definition for “important data,” leaving it subject to the discretion of Chinese regulators.

Amid these developments, China’s State Council unveiled a 24-point plan in August aimed at supporting foreign businesses operating in the country, including measures to reduce regulatory inspections for low-risk companies and facilitate data flows for certain foreign businesses.

The proposed relaxation of data export controls follows other recent regulatory relaxations, including the eased regulations for artificial intelligence (AI) announced in late August, which allowed companies to launch generative AI chatbots to the public. The updated AI rules demonstrated a more innovation-friendly approach, with a relaxed application scope compared to earlier drafts. Baidu CEO Robin Li regarded the new rules as more supportive of innovation than strictly regulatory.