Shanghai plans to speed up approvals for foreign companies that want to send local data overseas, four people familiar with the matter said, in what would be a major easing of China's strict data rules unveiled more than a year ago, Reuters reported. In recent weeks, the Shanghai government has discussed the so-called fast-track approval initiative with representatives of a number of foreign companies operating in the business hub, including some Western banks and asset managers, two of the sources said.
The government's planned move comes as the world's second-largest economy faces a sluggish post-pandemic recovery, a housing slump and deepening market turmoil as China seeks to attract foreign investors.
Foreign financial firms have been lobbying the Chinese government to allow cross-border sharing of information after Beijing tightened controls on data within its borders to safeguard national security.
Rules announced in 2022 will require all "important" offshore data transfers related to domestic operations to pass a security review by the Office of the Central Cybersecurity and Information Technology Commission (CAC), causing confusion and concern among foreign companies.
Shanghai is likely to allow foreign companies to use its free trade zones to move data overseas, two sources said, as free trade zones enable the local government to offer tax, regulatory and other preferential policies to global companies operating there.
They added that the Shanghai government's plan will be separate from the China Foreign Exchange Trading Center's cross-border data transfer approval system, which will continue to apply to foreign-invested institutions in other parts of the country.
One of the sources said the Shanghai government's move is likely to be implemented within this year. All sources declined to be named due to the sensitivity of the matter.
Shanghai plans to allow financial institutions to transfer operational data overseas under national data transfer security protocols, the city government said in a statement on its website on Tuesday, without providing details.