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China's Second Draft Cybersecurity Law's Expanded Data Localization Requirement
Cybersecurity has remained a priority for the Chinese government in 2016. Following closely on the heels of the enactment of the National Security Law and the Anti-Terrorism Law, the second draft of the Cybersecurity Law was released for public comment on July 5, 2016. Although still in draft form, when it is adopted, the Cybersecurity Law will impose a number of requirements on companies with business operations within the territory of China that have been subject to heated discussions among multinational companies (MNCs). This article provides a review of a significant amendment in the second draft of the Cybersecurity Law that could have a substantial impact on MNCs' China operations ' the expansion of the law to require the storage of a broad array of personal and business information within China.
The Expanded Data Localization Requirement
The first draft of the Cybersecurity Law included a data localization requirement that was relatively limited in scope with respect to both the type of the companies that would be subject to the requirement and the type of data had to be stored within China. Despite these limitations, private industry, including the MNCs, expressed concerns about the lack of clarity regarding the scope of the requirement. Instead of paring back the data localization requirement or clarifying its scope, as hoped for by MNCs, the second draft Cybersecurity Law goes even further than the original proposal, expanding the data localization requirement to an even broader set of companies and data.
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