China is taking steps to protect its digital sovereignty. This is how the latest movements carried out by Beijing are interpreted, which has been propping up its ability to maneuver over big technology (both domestic and foreign) for some time and making sure that what happens in cyberspace cannot erode state power. In this context, last week’s announcement is framed: the Government prohibits cryptocurrencies. It will no longer be possible to operate with them in the Asian giant, so the only virtual currency allowed will be the digital yuan. China thus becomes the first great power to make a final decision in this area.
It is not the only far-reaching policy that has been deployed lately in the digital sphere: in November the country’s first data privacy regulation will come into force. The Personal Information Protection Law (PIPL) establishes rights for citizens similar to those provided by the General Data Protection Regulation (RGPD) of the EU. Companies will have to collect as little personal data as possible and keep it in their possession for the shortest possible time. To do so, they will need the prior consent of the users, who may also request the portability of that data or access it if they so wish.
Never before have Chinese citizens had guarantees of this kind. The regulation comes to light after several scandals related to the mismanagement of personal data increased public awareness on this issue. The most mediatic case was that of the death in 2016 of a young student from cardiac arrest after Finding out that all of your family savings had been stolen by a scam made possible by the breach of your data. Although the restrictions of the new regulation do not affect public authorities, which will be able to continue controlling citizens with digital tools, the message is clear: anything goes.
That is the most talked about derivative of the regulation: it fully affects all companies that operate in China, including foreign ones. His focus, in fact, is on the latter. “It greatly restricts cross-border data trading. Those who want to access this information will need authorization from the CAC, the China Cybersecurity Council. In a way, it is a way of protecting the data generated in China ”, interprets Andrea G. Rodríguez, researcher in emerging technologies at Cidob (Barcelona Center for International Affairs).
Managing cross-border data flows is not a simple matter. The United States and the EU have had their pluses and minuses about it. Between 2000 and 2015, the Safe Harbor agreement allowed US companies to bring data collected in Europe home. Annulled by the Court of Justice of the EU (CJEU) following the revelations of Edward Snowden, which exposed the systematic espionage of the USA in several European countries, Brussels and Washington signed a new agreement in 2016, the Privacy Shield , to allow big technology to take the data back to America and process it there. The CJEU declared it invalid in 2020, considering that the US did not offer sufficient guarantees to ensure that European data was treated with privacy standards comparable to those of the EU.
Google, Facebook, Amazon and any other large American company have not stopped processing the data of EU citizens, but now they do it on European soil, which means that they have to follow EU rules. That is the same thing that will happen from now on in China: it will be possible to continue operating, but according to its rules.
In a sense, China’s turn to privacy can be interpreted as a response to Western policies against Asian companies. “The authorities are putting reservations that companies that have data on Chinese citizens go public outside the country. It is a reciprocal reaction to the one that the US had when President Donald Trump banned the download of Chinese applications TikTok or WeChat in the country, “says Luis S. Galán, who has lived in China for more than a decade and whose development company digital, 2Open, operates out of Shanghai.
Defend digital sovereignty
One of the characteristics of cryptocurrencies is that they anonymize transactions. Before becoming a vehicle for speculation, bitcoin was a benchmark for those who dreamed of an alternative monetary system, decentralized and self-managed by the user community. If they were imposed on the traditional currencies, which today are legal tender, the world’s central banks, and therefore the governments themselves, would lose part of their reason for being.
The world has not yet decided what to do with cryptocurrencies. Some countries, like El Salvador, have embraced it without reservation; others, including the United States or Europeans, still debate how to regulate them. China has resolved to nip them in the bud. They are considered a national security problem because they can cover money laundering, illegal fundraising, fraud and other illegal activities, according to the Chinese Central Bank. They also pose a threat from the environmental point of view, while the mining of cryptocurrencies (this is how the process by which the system is managed and new currencies are generated is known) requires a large computational capacity, which translates into huge energy consumption.
Ending cryptocurrencies and increasing the privacy standards required of national and international companies reinforce the power of Beijing in that kind of nebula that is cyberspace. The Chinese authorities are fully aware of the importance of data privacy. “I think one of the main reasons why he has made the decision to approve the new PIPL law is because he wants to take care of his national security,” says philosopher Carissa Véliz, author of Privacy is Power (Debate). “Storing so much personal data is a huge risk; sooner or later, the West was going to hack them, just as China hacks the West ”.
For Professor Véliz, the new Chinese regulatory framework represents a paradigm shift in terms of the construction of the privacy narrative. “One of the arguments that Facebook used to not regulate it was that if they did, it would not be able to compete on equal terms against Chinese technology companies, which operate without any type of regulation. Now that argument no longer works ”.
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