US think tank warns Hong Kong over the economic costs of imposing strict data rules to align with mainland
- Currently, Hong Kong does not have any restrictions on cross-border data transfers
- China has passed a web of data regulations, aimed at keeping what Beijing deems as important and sensitive data within the mainland
A Washington-based think-tank has warned that Hong Kong could lose 5.7 per cent of its potential trade volume in five years if the city falls into line with Beijing’s desire for stricter control of international data flows, as the city mulls changes to its data laws.
Currently, Hong Kong does not have any restrictions on cross-border data transfers but Beijing’s drive for more control over cybersecurity threatens this openness, the Information Technology and Innovation Foundation (ITIF) said in a report published on Monday.
If Hong Kong puts in place data localisation policies, it will see import prices increase 1.5 per cent in five years, while trade volume and imports may decline about 5.7 per cent and 6.8 per cent respectively, according to the ITIF.
“Data localisation is a mistake for all countries, but it’s especially costly for smaller economies like Hong Kong because it deters foreign investment,” wrote Nigel Cory, an associate director of the ITIF and one of the authors of the report.
Hong Kong’s data protection law, the Personal Data (Privacy) Ordinance, was a pioneereeing piece of legislation when it went effect in 1996, but it is increasingly considered outdated as countries around the world put in place more comprehensive data regimes.