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Home > Data Security and Integrity
Does China prohibit cross-border transfer of scientific data?
By Henry Chen | 2018/6/11 14:54:33

On March 17, 2018, the State Council of China issued the Measures for the Management of Scientific Data, a regulation focusing on the protection of scientific data.  The regulation mandates that scientific data of science projects must be concentrated, managed and preserved via scientific data centers and sets strict application-and-approval process for scientific data’s transboundary transfer. 

A lot of articles including those from some mainstream media expressed the concern that China is setting up another Great Wall to ban the outflow of data from within China, and especially foreign-invested institutions in China must seek government approval before transferring their proprietary scientific data outside China.  Some even interpreted the regulation as Chinese government’s retaliation against Trump’s trade protectionism.

However, after looking into the text of the regulation carefully, we may find that these interpretations are not all right and some could be misleading.  Article 3.1 of the regulation narrows down its application to “the activities that are supported by governmental fiscal funds in relation to scientific data’s collection and production, processing and sorting, open-up and sharing and administration and usage.”  In other words, if the data activities are not in any way linked to governmental fiscal funds, the regulation would not be applicable.

Let’s take Tesla for example.  If Tesla has a self-funded research center in Shanghai, all the data that the center legitimately produced and collected from this center could be certainly transferred to Tesla’s headquarters in the United States with some possible exceptions under Cyber Security Law and some other laws.  However, the Measures for the Management of Scientific Datacould not sets one-size-fits-all restrictions or prohibitions for Tesla’s transboundary transfer.  Certainly, if Tesla’s data activities are in any way linked to governmental sponsorship, the Measures for the Management of Scientific Datawill be applicable (Article 3.2).  

That said, non-Chinese companies will nonetheless have to check if their data activities and research policies are involved governmentally.  Sometimes, governments could be involved in an unexpected way.  For example, a university’s participation in a research project would be enough to trigger governmental involvement as almost all of the universities and institutes are owned by the state.  

We did a quick research with Baidu in use of Chinese characteristics of “foreign-invested enterprises” and “universities” and found a lot of news that foreign-invested enterprises lian yin (getting married with) Chinese universities.  For example, in 2012, EBNER (a global market leader in heat treatment facilities for the metal semi-finished products industry) “got married with” the Material Science and Engineering Institute of Shanghai University so that “manufacturing”, “study” and “research” could become inter-connected and supplementary with each other.  For another example, 17 universities “got with married” with 34 enterprises in Jiangxi Province in 2017.  From the news report, we could not see if there were foreign-invested enterprises involved.  However, it was sensationally reported that universities and enterprises “got mattered”, experts and businessmen “fell in love”, and as such scientific research and market were going to “have babies.”  It can be foreseen that with the promulgation and implementation of the regulation, there will be no honeymoon between foreign-invested enterprises and Chinese universities as the babies could be taken away from their parents.

You may follow the link to review the regulation in Chinese.

*The author, Henry Chen, is a senior partner of Dentons Shanghai Office, before which Henry Chen was the AP Compliance Director of Ford Motor Company.  Henry Chen is licensed to practice law in both China and the New York State of the U.S.  Henry is the author of the book Risk Management on Commercial Bribery in China.  Henry is accessible via  

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