Thread by @freefader

There's an overlooked debate re: data security policy in China. Yesterday, a researcher at CAICT - a think tank under MIIT that supports research and rollout of ICT policy - published an op/ed arguing that current global views on data localization are seriously flawed. 1/

Why it matters: data localization requirements are a critically important (and still evolving) piece of China’s cyber/data security framework. Compliance with strict (and vague) data localization requirements in China is a major strategic business challenge for multinationals. 2/

The surprising crux of the op/ed’s argument: the benefits of data localization are far from clear, and there are huge potential costs from implementing the concept poorly.

"The role of data localization in maintaining national security is doubtful." 4/

secrss.com/articles/35978

"The establishment of data barriers may bring short-term commercial benefits to domestic companies in new areas of strength, while at the same time sacrificing broader and lasting global economic benefits." 5/

In making her case, the author covers data localization laws around the world, and contrasts with pro-data flow views of international orgs like the G20 & WTO.

Conspicuously absent: Discussion of *China’s* data localization ... but *much* to read between the lines. 6/

"... governments of various countries still make data localization decisions based on their own understanding of "national security", which makes some multinational companies have to choose to leave certain markets instead of complying with restrictive data localization" 7/

The context of this comment is of course the recent departure of LinkedIn and Yahoo from China, decisions that were made in light of new data security and personal information localization requirements. 8/

The deeper context: A central piece of China’s econ development strategy is leveraging the power of data. But agencies like MIIT and CAICT are worried that security concerns are carrying the day. In a white paper on data valuation published earlier this year, CAICT wrote: 9/

“... implementation of the "Cybersecurity Law" (also has data localization) and the increase in criminal law enforcement have brought compliance risks far greater than benefits. At present, data security protection is still a shackle that restricts the circulation of data...” 10/

The ultimate concern: permanent damage to the global data economy. The author of today's piece concludes "Even if the needs of economic development can prompt countries' data flow policies to make some concessions at the economic and trade level... 11/

... the international trend of data localization is still irreversible, and the great power game within the global digital geography will continue."

This is not CAICT/MIIT's official view, but concern of CN’s econ development orgs that security will eat economy is palpable 12/

Important always to remember that the Chinese government is not a monolith: internal debates abound, it's part of policymaking. But I expect this one to grow, and you should pay attention... b/c this is not just a challenge for China, but the globe, as the op-ed indicates 13/