In an effort to increase control over data and counter foreign sanctions, the Chinese government passed two new laws, which will heighten the risk of doing business in China.
The first of the laws touches on data security, claiming that data collected by government entities and companies in areas like finance and telecommunications are part of “core state data.” Thus, this data should be treated as “a new type of state-owned asset, and its data rights belong to the state.”
What classifies something as “core” is intentionally vague so the Chinese government can claim any information they want: a power scheme.
The law grants the Chinese government power to reprimand any firms found misusing “core state data” including revoking business licenses, ordering a firm to pay whopping sums ($1.6 million) for each violation, or shut down business operations altogether, The Federalist reports.
Unfortunately for the rest of the world, foreign businesses operating in China are not exempt from the law. The Chinese government already demanded all foreign tech companies store their data collected in China as a prerequisite to access the Chinese market.
Furthermore, the new law extends control and enforcement overseas. Companies that “leak sensitive data abroad can be hit with similar fines and punishments, and those providing electronic information to overseas law enforcement bodies without permission can face financial penalties up to [$781,470] and business suspensions.”
The second new law aims to address the increase of foreign sanctions on China. Several countries – including the U.S., Britain and Canada – launched coordinated sanctions against the Chinese government over their alleged roles in putting Uyghurs and other minority groups in “arbitrary detention.”
The objective of the new law is to give the Chinese government additional legal cover to impose “countermeasures” against foreign entities and individuals for enforcing sanctions. The countermeasures include “denying and revoking visas or expulsion, seizing and freezing assets within China, blocking transactions and cooperation with Chinese individuals and entities, as well as ‘other necessary measures’ that weren’t specified.”