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In a quest to rein in its tech giants, China turns to data protection

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In a quest to rein in its tech giants, China turns to data protection

Chinese President Xi Jinping in Beijing on Jan. 22, 2021.

Shen Hong | Xinhua News Agency | Getty Images

Early Newspaper

GUANGZHOU, China — China is looking to tighten principles around how its citizens’ personal data is restful, as it moves to additional rein in the vitality of technology giants care for Alibaba and Tencent.

A robust data framework may perhaps assist nations define how the subsequent-generation internet seems to be as successfully, one expert said, pointing out that it may perhaps develop to be a geopolitical inform as China seems to be to challenge the U.S. in the technology sphere.

Nonetheless the transfer has also raised debate about whether or no longer these same principles will apply to one among the nation’s largest data processors — the manager.

Last year, Beijing revealed the draft model of the Personal Information Protection Law (PIPL), laying out for the primary time a entire area of principles around data series and protection. Beforehand, various pieces of piecemeal legislation governed data.

It be considered as part of a bigger effort to rein in the vitality of Chinese technology giants which have been able to develop unencumbered over the past few years by way of the vast series of data to train algorithms and variety products, consultants said.

… Users are becoming extra knowledgeable, and they are becoming angry with companies abusing their personal information.

Winston Ma

Unusual York University Faculty of Law

In February, China issued revised antitrust principles for thus-called “platform economy” companies, which is a broad-brush time frame for internet corporations operating a variety of companies and products from e-commerce to food shipping.

“The executive wants to rein in some … of these technology giants,” Rachel Li, a Beijing-based partner at the Zhong Lun Law Firm, told CNBC by phone. “This legislation … goes along with other efforts such as antitrust.”

Data protection principles

Globally, there has been a push toward extra robust principles to provide protection to individual data and privacy as technology companies and products continue to expand.

In 2018, the European Union’s landmark General Data Protection Regulation came into earn. Called the GDPR for brief, it provides citizens in the bloc extra regulate over their data and grants authorities the ability to fine companies that fall ghastly of the principles. The U.S. has yet to enact a nationwide data protection law care for Europe.

Now China is attempting to carry out something similar.

“After years of Chinese internet companies building business units around Chinese folk’s lack of awareness about privacy, customers are becoming extra knowledgeable, and they are becoming angry with companies abusing their personal information,” Winston Ma, adjunct professor at the Unusual York University Faculty of Law, told CNBC via email.

China’s Personal Information Protection Law applies to the nation’s citizens and to companies and individuals handling their data.

Right here are key parts of the law:

  • Data collectors need to accumulate individual consent to accumulate information and customers have a legal to withdraw that consent;
  • Companies processing the data cannot refuse to provide companies and products to customers who carry out no longer consent to have their data restful — unless that data is necessary for the provision of that companies and products or products;
  • Strict requirements and principles for transferring Chinese citizens’ data originate air the nation, including getting executive permission;
  • Individuals can request for their personal data that’s being held by a data processor;
  • Any company or individual falling ghastly of the principles may be fined no extra than 50 million yuan ($7.6 million), or 5% of the annual turnover. They may also be compelled to stop a few of their business.

What it means for tech giants

In general, the age of ‘exponential development in the desolate tract’ for Chinese technology companies’ expansion is over, whether or no longer domestic or overseas.

Winston Ma

Unusual York University Faculty of Law

Nonetheless there are signs that scrutiny may be widening. Reuters reported last month that Pony Ma, the founding father of gaming giant Tencent, met with antitrust watchdog officials to talk about compliance at his company. Tencent owns social networking app WeChat, which has develop to be ubiquitous in China.

Ma from NYU illustrious that the data protection law will have a “balanced approach towards the relationship between individual customers and internet platforms.” Nonetheless combined with other regulations, it may perhaps slack down the expansion of technology giants, he said.

“In general, the age of ‘exponential development in the desolate tract’ for Chinese technology companies’ expansion is over, whether or no longer domestic or overseas,” he said.

Li added that some companies may be compelled to change their business units.

‘Geopolitical factor’

Consultants previously told CNBC that China’s push to regulate its internet sector is part of its ambition to develop to be a technology superpower as tensions between Beijing and Washington continue. Data protection regulation is part of this push.

“To a large extent, the cyberspace and digital economy remains undefined, the data law framework has develop to be a geopolitical factor,” said Ma from NYU. “Whichever nation can take the lead in achieving breakthroughs in legislation or its mannequin of building, it can provide a mannequin for the subsequent-generation internet.”

Ma said that if there’s a digital economy model of World Trade Organization principles, nations with robust data laws can have “leadership vitality.” The WTO is a community of 164 member states that aims to create principles around global trade.

“That is why extra and extra are talking about what the China mannequin is.”

Read extra about China’s tech push

Potential contradictions

The Chinese data protection law contains a allotment on state agencies processing information.

In theory, the state need to peaceful adhere to similar principles around data series as a private company — however there’s debate over whether or no longer that is the case.

“We regularly think about the PIPL in terms of its applications to Alibaba or Tencent however we put out of your mind that China’s state agencies are the nation’s largest data processors,” said Kendra Schaefer, a partner at Trivium China, a research agency based in Beijing.

“There may be active debate in the Chinese legal and academic communities around how the PIPL needs to be applied to administrative activities,” she said. “One specific inform is the the PIPL provides individuals the legal to give informed consent when their data is restful however this may battle with, for example, police investigations by law enforcement.”

“What’s interesting is that a national conversation is starting around what the Chinese executive can or cannot carry out with citizen data, and how the law need to peaceful define the state’s obligations,” Schaefer added.

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In a quest to rein in its tech giants, China turns to data protection