The Regulations Of Cross-border Data Flows:Compliance Challenges And Solutions For Chinese Enterprises’ Outward Investments

In order to protect data security,China’s legislation endorses relatively strict regulation of cross-border data flows,advocating that personal information and important data collected and generated in the course of operations in the People’s Republic of China should be stored within the country.While this protects the security of our data to a certain extent,it also has some negative implications.For companies intending to invest abroad,the localized data storage measures have detracted from the value of data,increased the cost of business operations and raised the risk of investment,posing compliance challenges for Chinese companies investing abroad.As a capital-exporting country,China’s regulatory rules on cross-border data flows have many imperfections,such as unclear compliance bodies,lack of operability and insufficient alignment with current international trends,leaving enterprises with uncertainty in complying with the rules.At the international level,there is a lack of consensus on international cross-border data governance in international treaties,such as the difficulty in reaching a consensus on data regulation under the WTO framework,the fragmentation of data regulation in major regional international trade agreements,and the lack of clear provisions in two-sided international investment agreements.In major capital-importing countries(or economies)such as the US and the EU,there are also many differences in legislation on data crossing borders and a lack of uniform quantitative standards for data flows as a result.Inadequate preparation for foreign investment can lead to financial losses,increase the cost of compliance and even influence the decision to invest abroad.In detail,the expansion of data jurisdiction between different countries in terms of legislative,judicial and enforcement rules may lead to two-way compliance problems and increase the operating costs of enterprises;the inconsistent positions of capital importing and exporting countries on the regulation of cross-border data flows may increase compliance costs and lead to compliance conflicts;the above dilemma may cause some enterprises to abandon outward investments.Therefore,at the level of international participation,China should guide and promote the formation of unified international governance rules,use the principle of fairness and mutual benefit to promote the achievement of international consensus,and form international collaboration through multilateral mechanisms.At the level of domestic reform,China should unify the identification standards,clarify the compliance subjects,improve the existing regulatory system in China,pay close attention to the dynamics of international data compliance,and realize the linkage of domestic and international rules.In order to promote enterprise compliance,the government can take the lead in establishing a standardized and efficient data trading platform,advocate for enterprises to actively play a major role in reducing the possibility of information leakage by using encrypted data transmission,blockchain technology and other technological means,carry out security assessment work for cross-border data transmission in accordance with the law,establish and improve the industry self-regulatory system for cross-border data flow,and encourage enterprise compliance with incentive mechanisms to help our enterprises to be able to better meet the compliance challenges they face when in e-commerce,third-party payment and other businesses involving data across borders.