Briefing: China offers free-trade zone for foreign cloud providers in US trade talks

By Eliza Gritsi
1 min read

China Floats Cloud Concession to Foreign Tech Firms in U.S. Trade Talks – The Wall Street Journal

What happened: Chinese Premiere Li Keqiang briefed on Monday about 36 heads of foreign corporations, including IBM and BMW, on a proposal which will open up the country’s cloud computing market by allowing foreign tech companies to own data centers in China in a pilot free-trade zone. The pilot program is part of a larger compromise Beijing is pursuing to ensure a trade deal with the US. Until now, China had refused to budge on its cloud computing restrictions, citing national security, despite pressure from international tech giants and the US government.

Why it’s important: Data localization laws are notoriously strict in China, especially after a new cybersecurity law that came into effect in June 2017 which regulates data flow and storage facilities. Foreign cloud providers like Apple and Amazon must either partner with a local company and license their technology and data, or give up on China’s market altogether. The pilot proposal is a discretionary concession, under which the government will maintain control over the cloud industry but unleash some forces of liberalization. Beijing hasn’t addressed whether it will allow data to flow freely from the zone to the rest of the country.