Move follows bid to join CPTPP . . .
China has formally applied to join the Digital Economy Partnership Agreement (DEPA). Singapore, New Zealand, and Chile launched the pact together in June 2020 (it entered into force in New Zealand and Singapore in January 2021). The agreement does not have binding rules. Nonetheless, it has potential as a mechanism to strengthen multilateral co-operation on digital economy issues, like data protection and transfers, privacy, lowering barriers for cross-border e-commerce, and interoperable regulations for emerging technologies like artificial intelligence. DEPA also emphasizes the free flow of data among members. Beijing’s DEPA move comes on the heels of its application to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which also has increasingly relevant provisions on e-commerce and secure-yet-free flow of data.
Sending mixed signals . . .
The application comes as Beijing has tightened technology regulations impacting diverse sectors, from online education and e-commerce to gaming. Through the new Data Security Law (passed in June) and the Personal Information Protection Law that entered into force on Monday, Beijing strictly regulates the storage, transfer, and processing of personal information. It also restricts the cross-border transfer of data considered to pose a national security threat or undermine the “public interest,” including data held by foreign firms. This clampdown on the technology sector has caused waves for Chinese tech companies. Zhang Yiming, co-founder of ByteDance, the company behind short-video apps TikTok and Douyin, stepped down as the company’s chair yesterday following similar C-suite executive reshuffles in other tech firms such as e-commerce giants Pinduoduo and JD.com.
The unease of doing (online) business in China . . .
Citing a progressively challenging regulatory environment, foreign technology companies like LinkedIn and Yahoo have drastically limited their digital services or outright left China’s Mainland market. Epic Games is the latest U.S. company to ‘rage quit’ China amid tighter regulations. In collaboration with gaming leader Tencent, Epic ran a ‘test’ server – it never officially launched in the Mainland – of its global hit game Fortnite, but the company says it will shut it down later this month. China’s direction on technology governance casts doubts on its commitment to international initiatives like DEPA, which clearly eschew any policy that impedes the free flow of data among members. Despite its contradictory approach, Beijing more likely seeks to join DEPA (and CPTPP) to participate more directly in and influence global digital trade standards and practices.
- Caixin Global: China tightens scrutiny of outbound data transfers
- Nikkei Asia: China applies to join digital trade pact with Singapore and NZ
- TechCrunch: As Yahoo leaves China, an accelerating stream of exits