Chinese megacity’s ex-mayor urges unfettered internet access and data flow in free-trade zones to compete with US

China should make better use of its free-trade zones to allow unfettered internet access and data flow beyond its borders to close the widening gap with the United States in the digital economy and break the tech blockade, an outspoken former official has said.
Huang Qifan, former mayor of the southwestern megacity of Chongqing, told the Bund Summit in Shanghai on Sunday that China could tap into the free-trade zones scattered across the country in an effort to catch up with tech rival US in the digital economy – a term that encompasses the tech industry as well as others that depend on digital technologies.

“We are being edged out as our tech giants have grown smaller in size and the US and Europe enact new digital economy rules on data flow, storage and privacy and move to contain us,” Huang said.

Chongqing’s outspoken ex-mayor warns Big Tech about data practices

The candid former official, known for his insights on the economy and financial markets, is also a former deputy director of the Financial and Economic Affairs Committee of the National People’s Congress.
The combined market capitalisation of China’s top 10 digital firms stood at a mere 17 per cent of that of the top 10 American digital giants in 2022, down from 24 per cent in 2019.

Huang said China lagged behind in underlying technology, global market share and the international adoption of its rules on data management and privacy.

But Beijing is now betting on its digital economy – valued at 50 trillion yuan (US$6.8 trillion) last year, with annual growth outpacing overall GDP growth over the past decade – to boost the moribund economy.

Huang urged policymakers to look to free-trade zones as ideal testing grounds for reform.

“The widening gap [with the US] calls for exigent reforms to unleash innovation. Free-trade zones can test reforms and models before nationwide implementation, since issues such as data ownership, transactions and cross-border flows are complex and may involve nationwide consequences if not properly handled,” he said. “Free-trade zones can and should blaze a new path.”


Why Singapore benefits from the US-China tech war

Why Singapore benefits from the US-China tech war

Chinese online retailers and import-export companies must rely on virtual private networks (VPNs) to circumvent China’s “Great Firewall”, landing them in a legal grey zone.

Data controls and labyrinthine regulations governing cross-border data transfer have been a major concern for foreign companies in China, causing them to hold back on investing in projects such as research and development centres in the country.

Huang called for archaic laws to be scrapped and said special arrangements could be made for cross-border data flow and storage and fewer restrictions on internet access within free-trade zones.

He said free-trade zones in the eastern province of Zhejiang and other regions with extensive trade ties could pilot these reforms, provided that some state powers could be delegated to provincial authorities.

Huang said free-trade zones should seek cooperation with advanced economies such as Singapore and play by established rules such as those specified in the Digital Economy Partnership Agreement – a digital trade pact launched by Singapore, Chile and New Zealand in which China hopes to gain membership.

He added that having a “white list” of free-trade zone businesses could streamline supervision and allow more flexibility in data access for law-abiding companies in financial services, the car industry and e-commerce.

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