Desperate China now bans sharing of bad news which can keep foreign investors away

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In another drastic step, which many see as a measure to choke dissemination of data, the Chinese authorities published new data security draft regulations last week. This could impact data sharing for multinational companies operating in China or even other firms which operate beyond the country.</p>
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According to <a href="https://www.globaltimes.cn/page/202109/1235543.shtml">Global Times</a>, the new regulation would “ban the export” core and important data.</p>
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The Beijing based news organisation defended the step saying that this is necessary “to ensure national security and normal functioning of society,” most others have registered their discontent.</p>
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However, <a href="https://www.reuters.com/world/china/china-issues-draft-rule-data-security-industry-telecoms-2021-09-30/">Reuters</a> said that “lawyers have criticised its ambiguities including its lack of definitions for data.”</p>
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The new draft measures come at a time when China’s economy is staring at serious challenges amid power outage and a debt crisis driven by the real estate major Evergrande Group.</p>
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Several suppliers for multinational companies such as Apple and Tesla have had to halt production in a bid to adhere to the energy consumption policies.</p>
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“Typically a lot data sharing is required especially when a company assumes scale and operates across geographies. With this new policy, companies will have to reorganise their operations,” an analyst told India Narrative.</p>
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<a href="https://www.china-briefing.com/news/a-close-reading-of-chinas-data-security-law-in-effect-sept-1-2021/">China Briefing</a> said that for multinational companies headquartered in China or with branches in China, cross-border data transfer might be inevitable when engaging with overseas companies or investors.</p>
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“Businesses are well advised to carefully evaluate if they fall into the scope of critical information infrastructures operators before transferring their data to overseas parties and must keep a close eye on future legislative developments to avoid compliance risks and potential penalties,” it said.</p>
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The draft, introduced last week, have categorised data into three sets- ordinary data, important data, and core data.</p>
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Ordinary data is the set of information which has limited impact on society. Important data refers to the information which is linked to the national and economic areas and can even impact individual or organisational rights. Core data refers to statistics that can bear a "serious threat" to China's national and economic interests.</p>