Measures taken by China, India and others include restrictions on cross-border data transfers and laws requiring data localisation, mandating that servers storing information about a nation’s citizens be located within its borders.
Nine countries and regions in the Asia-Pacific region, including Brunei and Nepal, have implemented restrictions on cross-border data transfers, according to a survey by the Organization for Economic Co-operation and Development and the Japan External Trade Organization (Jetro) using data through 2022.
Eight countries and regions, including South Korea and Laos, have introduced data localization regulations.
China, Hong Kong, India, Indonesia and Pakistan have adopted restrictions regarding both data localisation and cross-border flows.
Of the 34 countries surveyed in Europe, only three have introduced both regulations. That includes cases where regulations apply only partially, in fields such as telecommunications and finance.
In the Asia-Pacific region, China’s movements have attracted particular scrutiny. In 2021, the government introduced the Data Security Law, which restricts the movement of data considered relevant to national security. Foreign companies operating in China have voiced concerns that they will no longer be able to share data with their head companies in their home countries.
For example, it could become difficult to build a smart factory that allows the operating status of equipment to be monitored remotely via the internet.
Mobility-as-a-service, or MaaS – the concept of integrating multiple forms of transport into a single convenient service – also requires large-scale data linkage, prompting worries it could be affected by cross-border restrictions.
Business activities and economic growth could be affected if the free movement of data, often the source of a company’s competitiveness, is blocked. There is also the risk that a foreign company attempting to enter a country would be at a competitive disadvantage compared to a local entity.
“Japan actively participating in free trade agreements and other efforts to develop digital rules could serve as a check,” said Kyohei Yabu, a research manager at Jetro’s overseas research department.
Policies governing the cross-border transfer of personal data have become a particular area of international focus due to concerns about data leaks. The US, Japan, South Korea, Taiwan and others are considering creating a new arrangement separate from the privacy rules system established by the Asia-Pacific Economic Cooperation forum, which includes China and Russia.
The Indo-Pacific Economic Framework (IPEF), which launched last May and was joined by Japan, the US, South Korea and 11 other countries, also includes a digital economy facet. Some negotiators party to IPEF say that topics related to the digital economy should be negotiated separately to ensure consensus at a high level.