Shanghai to Expedite Offshore Data Transfer Approvals for Foreign Firms

Shanghai to Expedite Offshore Data Transfer Approvals for Foreign Firms
Photo: 08.02.2024 366

Shanghai intends to expedite licenses for international corporations seeking to export their local data abroad, according to four persons familiar with the situation. This would be a significant relaxation of China's tough data rules, which were introduced more than a year ago.

According to two sources, the Shanghai government recently discussed the so-called fast-track approval project with representatives of some foreign enterprises operating in the commercial hub, such as western banks and asset managers.

The planned move comes as China is looking to woo foreign investors as the world's second-largest economy grapples with a sluggish post-pandemic recovery, a real estate slump, and a deepening markets turmoil.

Foreign financial firms have been lobbying the Chinese authorities to allow cross-border sharing of information, after Beijing tightened control of data generated within its borders in a national security drive.

The rules unveiled in 2022 require all "important" offshore transfer of data related to operations within the country to clear security reviews by the Cyberspace Administration of China (CAC), causing confusion and concern among foreign firms.

Shanghai is likely to allow foreign firms to transfer data offshore by leveraging its sprawling free trade zones, which enable the local government to offer tax and other incentives to global companies operating there, said the two sources.

The Shanghai government's plan, details of which have not been reported previously, will be separate from the CAC's cross-border data transfer approval system, which will continue to be applicable for foreign institutions in the rest of the country, they added.

One of the sources said the Shanghai government's initiative was likely to be implemented this year itself.

Shanghai plans to enable financial institutions to transfer operational data overseas under national data transfer security protocols, the Shanghai city government said in a statement on its website on Tuesday, without providing details.

Source: Reuters

digital markets  China 

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