China’s internet and data restrictions negatively impact U.S. companies and China’s economy
July 2016 SHANGHAI – China’s internet restrictions impose significant barriers to doing business in China for many U.S. businesses, says Viewpoint, the most recent policy report from Amcham Shanghai.
The report, titled “Unplugged: What China’s Internet and Data Restrictions Mean for U.S. Companies and China’s Economy,” highlights several restrictive policies that add to an increasingly challenging business environment, including the call for use of “secure and controllable” technology in draft regulations; enforcement of data storage inside China; stricter provisions on online publishing services; and increased supervision over internet domain registrations.
AmCham member companies contributed to the report by citing how these policies impede their business. Restricted internet access has hindered productivity and the ability to provide seamless service to customers. Data center localization imposes security and cost concerns and can compromise user experience. The “secure and controllable” language has already put American companies at a disadvantage when competing with local companies as some domestic Chinese banks and insurance providers have begun to switch their procurement practices to comply with it.
The impact of a restricted internet on member companies was identified earlier this year in AmCham Shanghai’s 2016 China Business Report, where 81 percent of companies surveyed named “internet access, restrictions and quality” as a top business challenge, number three on the list and ahead of such traditional challenges as unfair regulatory treatment restrictions.
In addition to the negative impact on U.S. companies, the Viewpoint report argues that Chinese companies and China’s economic development also suffer as a result of restrictive internet policies. Slow internet speed and blocked access to global data and networks undermine China’s efforts to build an innovative economy and hamper Shanghai’s goal of becoming an international financial center.
The report makes several recommendations to the Chinese government to improve the business climate and support innovation:
Eliminate “secure and controllable” requirements for procurement of IT infrastructure products. Instead, ensure a secure cyber economy by policies that encourage competition and customer choice, are open to non-indigenous technologies, and involve dialogue between industry and government.
Reconsider data localization requirements.
Continue to solicit input from the private sector on draft regulations.
Eliminate restrictions that block access to information on the internet. This policy could be introduced in the Shanghai FTZ and then extended throughout China.
Download your copy of the Viewpoint report from the AmCham Shanghai website. (This report was produced before China released the second draft of the Cyber Security Law.)
Click “Read More” below to view the report.