Hong Kong has the potential to serve as a data hub in the Greater Bay Area (GBA) for implementing a pilot scheme on cross-border data flow. A special task force is recommended to coordinate data transfer issues within the GBA.
These are the key insights of a research conducted by the City University of Hong Kong (CityU) and commissioned by Microsoft Hong Kong. Titled “Legal Research Project: Proposal for Hong Kong to be a Data Center Hub for the Greater Bay Area and China”, the research examined the legal issues related to cross-border data transfer and recommended Hong Kong as a suitable location to serve as a data depository and processing center for the GBA.
The research reviewed the legal framework of data protection and cybersecurity, and identified the key restrictions on free data flow among the three jurisdictions in China, Hong Kong and Macau. China has the tightest restriction whereas Hong Kong has no legal restriction on data flow.
Enacted since 2017, China’s Cyber Security Law has set out the fundamental rules regarding cross-border data flow in China. Yet, according to Lei Chen (pictured, right), associate dean & associate professor, School of Law at the CityU, the Law needs further clarifications.
“Key terms such as ‘important data’ and ‘Critical Information Infrastructure’ need to be clarified and defined to facilitate further discussion on cross-border data flow,” Chen said.
In Hong Kong, its data protection law focuses on the protection of privacy and security of personal data. To date, there is no legal or regulatory restriction on cross-border transfer of data to and from the city. It is in a good position to be a data hub for the GBA as a pilot, according to the research.
“Hong Kong has been actively participated in international agreements about cross-border data transfer,” said Chen. “Coupled with Hong Kong’s international positioning and robust legal framework, all these factors put the city in the forerun as the ideal location for being the data center hub for the GBA, and potentially for the entire China in the long run.”
Step-by-step pilot scheme
The research recommends a step-by-step pilot approach, which harmonizes the policies, regimes, and technical aspects related to data transfer within the GBA.
A special task force group is recommended to coordinate the legal institutions and government agencies in Guangdong, Hong Kong, and Macau.
“I think the Hong Kong government can take the lead in lobbying the governments in China and Macau to sit together for discussion,” said Chen.
In addition, the research recommends the establishment of a “white list” or a “negative list” for data flow. The “white list” permits certain categories of data to enter and exit in certain circumstances, while the “negative list” is able to ascertain the scope of data that are not allowed to be transferred freely. The ‘white list’ can be started with less sensitive or critical data such as open data and data not subject to legal or regulatory restrictions.
“Members of the special task force can discuss the white list or negative list together,” said Allen Yeung (pictured, left), founding chairman of the Institute of Big Data Governance (IBDG)
Yeung suggested elevating Hong Kong’s data governance to an international standard. It will then make the city a trusted location for cross-border data flow while facilitating innovation and technology progress.
“If you do well in terms of data protection in your own homeland, it gives yourself much credibility and builds the trust for other jurisdictions to allow data to come in and out,” he said.
Formed by a group of entrepreneurs and tech companies, the IBDG has a vision to turn Hong Kong into a global data hub. Yeung said the institute is working on some self-regulatory guiding principles related to data leakage such as the number of hours organizations have to inform data owners in the case of personal data breaches.
As the council member of the IBDG, Microsoft sees technology a key to unleash the true potential of the GBA.
“Data analytics is the means to get competitive advantages for businesses, governments as well as for R&D within the GBA,” said Cally Chan, general manager at Microsoft Hong Kong and Macau. “All sectors can be benefited from Hong Kong as a data hub.”