The Personal Information Protection Law, which was passed at a meeting of China’s top legislative body, the Standing Committee of the National People’s Congress (NPC), is the latest move in China’s regulatory crackdown on the tech, online education, fintech, gaming, and other sectors. The bill is aimed at online fraud, information theft, and data collection by local tech giants and articulates a set of rules around the better storage of user data and the conditions under which companies can collect data, including obtaining prior consent. There are also strict guidelines to safeguard Chinese citizens' data when it is transferred outside the country.
CNBC reports that the final draft of the bill still has to be published but an earlier draft state that companies cannot refuse to provide services to people who object to having their data collected. China’s state broadcaster, CCTV also says that the law stipulates that companies cannot use personal data to target customers for marketing.
Shares of Alibaba fell c. 3%, while the Hang Seng Tech Index, which tracks Hong Kong’s 30 biggest tech companies (including Tencent and Alibaba) fell c. 4.5% on the day. Meanwhile, the Nasdaq’s Golden Dragon Index, which tracks US-listed Chinese stocks, is down c. 53% from its peak in February (to 20 August). Chinese media reported that the law will be implemented from 1 November 2021.
Ever since Jack Ma (the founder of China’s largest e-commerce group, Alibaba) criticised Chinese banking regulators at an October 2020 financial summit in Beijing, many of China’s largest, predominantly foreign-listed, tech companies have experienced regulatory interventions which have severely curtailed or, in some cases, eliminated their profit-making opportunities.
Written exclusively for Moore South Africa by Marco de Matos from Anchor Research