In a move to bolster data security and regulate the cross-border flow of information, China is actively engaging foreign companies, with Tesla and Porsche among the first sought for input on proposed regulations.
Shanghai officials are gearing up to implement stringent regulations on cross-border data flow by March and have approached overseas entities, including Tesla and Porsche, to contribute to a proposed three-tiered regulatory framework, as reported by the South China Morning Post. These automakers are part of a group of 14 auto firms collaborating on proposals for the impending regulations, according to reports from Jiefang Daily and an official from the Lingang Administration Commission who chose to remain anonymous.
The proposed regulations aim to address a longstanding concern for foreign companies by clearly defining the types of data permissible for outbound transmission from China. While analysts welcome this initiative, they assert that the central government must take additional steps to address common grievances from overseas businesses, including data management and compliance with national security laws.
If implemented, the new regulations would establish a three-tiered system governing the flow of specific data:
General Data: Permitted for unrestricted overseas transfer.
Important Data: Subject to a security review before being allowed to be transferred overseas.
Core Data: Mandated to be hosted within China and subject to the strictest oversight rules.
Earlier this month, Lu Sen, Data Management Chief of the Lingang Free-Trade Zone Administration Commission, revealed at a forum that state ministries had been collaboratively creating lists of general data for various sectors, including automakers involved in autonomous vehicle production, financial institutions, shipping businesses, traders, and drug manufacturers.
Lu explained, “Task forces have been formed to pool officials, experts, and representatives from leading companies in these sectors together to hammer out lists and menus for differentiated supervision.”
While further details regarding data categorization remain undisclosed, Lu mentioned that the list of general data would progressively expand over time.
A survey conducted last year on business sentiment for the American Chamber of Commerce in Shanghai indicated that approximately 70 percent of respondents viewed digital policies, such as data localization and cybersecurity requirements, as hindrances. The report’s authors highlighted significant confusion around cross-border data filing and declaration requirements, causing companies to grapple with inefficiencies and compliance costs.
Moreover, 60 percent of survey participants expressed uncertainty about the interpretation and enforcement of policies, with nearly 48 percent citing increased operating costs due to data and security laws.
This development comes against a backdrop of security concerns surrounding Tesla in previous years. In response, the automaker took measures to address government uncertainty by announcing its commitment to store all vehicle data locally in China, particularly after certain locations temporarily banned the use of Tesla vehicles by military and government personnel.
