China has passed provisions which relax the current cross-border data transfer mechanisms. This comes as welcome news to the international business community, especially those with the need to export data from China in the course of their ordinary business activities.
A draft of the New Provisions was initially released in September 2023 for public consultation. The majority of measures introduced by the draft provisions to relax the restrictions on data exports, including the ‘blacklist’ approach to important data, certain exemptions and de minimis thresholds, have been retained in the New Provisions.
On 22 March 2024, the Cybersecurity Administration of China (CAC) promulgated the Provisions on Promoting and Regulating Cross-Border Data Flow (促进和规范数据跨境流动规定) (New Provisions), which take immediate effect. The press conference Q&A by the CAC helpfully clarified the principle that China’s restrictions over data export are only meant to apply to personal information and important data and not all types of data that may be transferred across China’s borders.
Position before the New Provisions
In terms of important data, exporting any important data is subject to security assessment. The term “important data” has been defined by various laws, including the Measures on Security Assessment for Cross-Border Transfer of Data (数据出境安全评估办法), as data that, once tampered with, destroyed, leaked, illegally obtained or illegally used, may endanger national security, economic operation, social stability, public health and security, etc.. This conceptual definition and the limited guidance otherwise given have exposed many businesses to significant compliance or operational risk.
In terms of personal information, the Personal Information Protection Law (the PIPL) requires organisations to rely on one of the following mechanisms (CBDT Mechanisms) to transfer any personal information outside of China: (i) security assessment; (ii) protection certification; (iii) China standard contractual clauses (China SCCs); or (iv) other mechanism as provided by laws, administrative regulations or the CAC.
Overall, the New Provisions ease the burden on data exporters under certain scenarios by:
- providing a clear mechanism for the business to identify important data;
- increasing the quantitative thresholds that would trigger a CBDT Mechanism;
- setting out scenarios whereby data export is exempted from the CBDT Mechanisms; and
- stating the period for which security assessments are valid is three years instead of two.
Key points of note in the New Provisions
A. Important data
Export of important data will continue to be subject to security assessment under the New Provisions. No exemption or de minimis threshold under the New Provisions applies to important data. However, the New Provisions make clear that for data which has not been designated and notified by the relevant departments or regions as important data, or publicly announced as such, data handlers are not required to apply for security assessment for such data before it is exported overseas.
This “blacklist” approach to important data significantly reduces the risks of a company inadvertently exporting important data and should be lauded for its practicality for business operations.
The New Provisions have also increased the validity period of a successful security assessment from two to three years. Within 60 days before the expiration of the validity period, absent circumstances necessitating re-application, the data exporter can apply for an extension of the valid period for another three years.
B. Exemption scenarios
The New Provisions provide that data exported in the following scenarios is not subject to the CBDT Mechanisms:
(a) ‘Unregulated’ data – data that is exported as part of international trade, cross-border transport, academic cooperation, and cross-border manufacturing and marketing activities, and does not contain important data or personal information;
(b) Business necessity – data that is exported in one of the following circumstances:
(i) export of personal information that is genuinely needed for the performance of a contract (eg cross-border purchase, cross-border delivery, cross-border payment, flight tickets and hotel reservation, visa application, examination service etc);
(ii) export of employee personal information that is genuinely needed for the purpose of human resource management in accordance with legally established employment regulations and collective contracts; or
(iii) export of personal information that is genuinely needed to protect the life, health and property safety of a natural person in an emergency.
(c) FTZ data – data that is outside the negative list in a free trade zone (free trade zones may establish their own ‘negative list’ on data export);
(d) Non-China originated data – Data that is not collected or generated within China but is provided to China for processing and, during the processing, no domestic personal information or important data is introduced into the set of data.
C. De minimis threshold
Unless otherwise exempted under the scenarios described above,
(a) Organisations are required to complete the security assessment if, since 1 January of the current year, they have:
(i) exported sensitive personal information of more than 10,000 individuals; or
(ii) exported non-sensitive personal information of more than 1 million individuals.
(b) Organisations that are not Critical Information Infrastructure Operators (CIIOs) are only required to adopt China SCCs or obtain the security certification if, since 1 January of the current year, they have:
(i) exported sensitive personal information of any but fewer than 10,000 individuals; or
(ii) exported non-sensitive personal information of more than 100,000 but fewer than 1 million individuals.
(c) Organisations that are not CIIOs are not subject to any CBDT Mechanism if, since 1 January of the current year, they have not exported non-sensitive personal information of more than 100,000 individuals.
For the avoidance of doubt, the exemptions under Section B above and the de minimis thresholds under Section C above do not apply to important data the export of which is always subject to security assessment.
The New Provisions suggest that the CAC is taking a business-friendly approach to data export. They also mean that many organisations may no longer need to complete the security assessment, obtain protection certification or enter into the China SCC and file with the CAC. All organisations should conduct a reassessment of their data export requirements and adjust their compliance framework accordingly. The press conference Q&A also provided useful guidance as to how to transition into the compliance requirements under the New Provisions.
