China’s data protection laws are aimed at helping the country’s technology giants

GUANGZHOU, China – China wants to tighten the rules regarding the collection of personal data from citizens, as it wants to further curb the power of technology giants such as Alibaba and Tencent.

A strong data framework can help countries determine what the next generation of Internet will look like, one expert said, pointing out that it could become a geopolitical issue as China wants to challenge the US in the technological sphere.

But the move also sparked a debate over whether the same rules would apply to one of the country’s largest data processors – the government.

Last year, Beijing published the draft version of the Personal Data Protection Act (PIPL), which for the first time sets out a comprehensive set of rules regarding the collection and protection of data. Previously, different pieces of legislation controlled data.

It is seen as part of a larger effort to harness the power of Chinese technology giants that have been able to grow unhindered over the past few years through the large collection of data to train algorithms and build products, experts said.

In February, China issued revised antitrust rules for so-called “platform economy” companies, which is a broad term for Internet businesses that run a variety of services, from e-commerce to food delivery.

“The government wants to curb some … of these technology giants,” Rachel Li, a partner in Beijing at the Zhong Lun law firm, told CNBC by telephone. “This legislation … is accompanied by other efforts such as antitrust.”

Globally, there has been a drive to protect more robust rules to protect consumer data and privacy as technology services continue to expand.

In 2018, the European General Regulation Regulation of the European Union will come into force. Briefly called the AVG, it gives citizens in the block more control over their data and gives authorities the ability to fine companies that break the rules. The US has yet to introduce a nationwide data protection law such as Europe.

Now China is trying to do something similar.

“After years of Chinese internet companies building business models around Chinese people’s lack of awareness about privacy, users are becoming more knowledgeable and angry at businesses that misuse their personal information,” said Winston Ma, associate professor at New York University School or Law, told CNBC in an email.

China’s Personal Data Protection Act applies to the citizens of the country and to companies and individuals who handle their data.

Here is an important part of the law:

• Data collectors must obtain permission from users to collect information and users have the right to withdraw that permission;
• Companies that process the data may not refuse to provide services to users who do not consent to their data being collected – unless that data is necessary for the provision of that product or service;
• Strict requirements and rules for the transfer of data of Chinese citizens outside the country, including obtaining permission from the government;
• Individuals may ask for their personal data stored by a data processor;
• Any company or person who violates the rules may be fined up to 50 million yuan ($ 7.6 million), or 5% of annual turnover. They may also be forced to strike some of their cases.

But there are signs that investigation could intensify. Reuters reported last month that Pony Ma, the founder of gambling giant Tencent, had met with antitrust watchdog officials to discuss compliance with his company. Tencent owns the social networking app WeChat, which has become well-known in China.

Mom from NYU noted that the data protection law will have a “balanced approach to the relationship between individual users and Internet platforms.” But combined with other regulations, it could slow the growth of technology giants, he said.

“In general, the era of ‘exponential growth in the wilderness’ for the expansion of Chinese technology companies is over, either domestically or overseas,” he said.

Li added that some businesses may be forced to change their business models.

Experts had earlier told CNBC that China’s pressure to regulate its Internet sector was part of its ambition to become a technological superpower as tensions between Beijing and Washington continued. Data protection regulation is part of this push.

“Cyberspace and the digital economy remain largely undefined, the data law framework has become a geopolitical factor,” said NYU mother. “Whatever country can take the lead in achieving breakthroughs in legislation or its development model, it can provide a model for the next generation of internet.”

Mom said that if there was a version of the digital economy of the World Trade Organization’s rules, countries with strong data laws could have ‘leadership power’. The WHO is a group of 164 member countries that aims to create rules around world trade.

“That’s why more and more people are talking about what the China model is.”

The Chinese data protection law contains a section on state institutions that process information.

In theory, the state should adhere to similar principles regarding data collection as a private enterprise – but there is debate as to whether this is the case.

“We often think of PIPL in terms of its applications to Alibaba or Tencent, but we forget that China’s government agencies are the country’s largest data processors,” said Kendra Schaefer, a partner at Trivium China, a research firm in Beijing. said.

“There are lively debates in the Chinese legal and academic communities on how the PIPL should be applied to administrative activities,” she said. ‘A specific case is the PIPL gives individuals the right to give informed consent when their data is collected, but this may conflict with, for example, police investigations by law enforcement. ‘

“What is interesting is that a national discussion is starting about what the Chinese government can or cannot do with civilian data, and how the law should define the obligations of the state,” Schaefer added.