China Steps Up With Tougher Data Security Regulation

This article first appeared on the BNEF mobile app and the Bloomberg Terminal.

  • Penalties for those who collect or exchange data illegally
  • Law follows crackdown on those who scrape user data

China’s lawmakers are reviewing the new data security law proposed. If passed, it will be the first enforceable law in China that regulates data use and protects data privacy.

The proposed laws specify penalties for those that collect or exchange data illegally – a fine of up to 1 million yuan ($140,000), or 10 times the illegal income. This is in line with last year’s government crackdown on big data companies that scrape user data without their consent.

The new law is a hybrid of personal data protection and cybersecurity. It mandates that companies protect ‘critical data,’ although it does not define this. The law also calls for a data screening system for national security purposes, an extension of the current censorship mechanism.

China is catching up to regulate the big data industry that has given rise to technology unicorns such as Alibaba and Tencent in the past decade. Through regulation, China also hopes to use its control of national, and foreign, data as a strategic resource.

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