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China has introduced a series of policies in
recent years to keep financial and personal data such as credit
history and health records on Chinese soil, particularly since
intelligence contractor Edward Snowden disclosed details of U.S.
spying.
China is not alone in weighing such measures, with countries
including Russia, Germany and Brazil ratifying or extensively
debating similar proposals in response to the spying.
Technology companies, on the other hand, said such localization
would lead to inefficiency, with U.S. search giant Google Inc
saying it would result in the "balkanisation", or fragmentation,
of the Internet.
The U.S. chamber, which has become increasingly vocal in the
past year as China implemented new cyber security regulations,
said in a report on Tuesday that "the damages to economic growth
... outweigh any theoretical benefits to security."
The chamber cited a study by the European Centre for
International Political Economy that said localization could
cause China's gross domestic product to fall by 1.1 percent.
China has mentioned data localization in seven laws or policy
papers since 2010, including in laws governing state secrets and
security, according to the chamber. The U.S. and China should
drop localization initiatives under a bilateral investment
treaty now being negotiated, it said.
The same day, U.S. Secretary of Commerce Penny Pritzker, in a
visit to China, said cyber security threats must be addressed
without creating barriers to trade or investment.
Chinese officials, for their part, have repeatedly said China's
cyber security regulations are in line with prevailing
international standards and are no more onerous.
Some technology vendors have begun making changes in response to
the data localization movement internationally. Microsoft Corp
said it would abide by such national demands while Apple Inc
said it would store Chinese user data for its iCloud service at
data centers operated by China Telecom Corp Ltd.
(Reporting by Gerry Shih; Editing by Christopher Cushing)
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