Beijing will pilot an intelligent system to assess and manage cross-border data flows as part of the city’s new free trade zone, the State Council said on Monday.

Why it matters: China’s data localization laws has been in place since 2017, but enforcement has been lagging. The law requires that overseas transfers of “important data” are cleared by public security authorities.

  • The local government of Beijing has been pushing policy to boost technology adoption in the city.

READ MORE: Dust has yet to settle two years after China’s landmark cybersecurity law

Details: The cross-border data flow management pilot is part of a wider system aimed at monitoring and controlling risks related to the free trade zone. It will make use of big data, AI, blockchain, and 5G to assess the security of potential cross-border data flows, in line with China’s data localization laws.

  • The pilot aims to explore whether the automated management system can correctly assess the risks related with transferring important data overseas, including the firms’ data security credentials and data backups.
  • The “comprehensive platform” will also be used to warn exporting firms of potential trade risks stemming from their exposure to overseas markets and regulations.
  • The FTZ plan also reiterates Beijing’s commitment to blockchain and fintech.
  • The city will create a designated “testing pilot zone” for China’s central bank digital currency. It will also use the central bank’s blockchain platform to build a standards system for trade-related financial transactions.

READ MORE: Beijing unveils plan for blockchain-based government

Context: Chinese law requires that important data, distinguished either by the size of the dataset or the nature of the data, are stored within Chinese borders.

  • Beijing unveiled its ambitious plan to integrate blockchain in several key aspects of the city’s governance in July, including customs clearance, real estate, finance, and more. The city wants to be a global hub for blockchain technology by 2022.

Eliza was TechNode's blockchain and fintech reporter until July 2021, when she moved to CoinDesk to cover crypto in Asia. Get in touch with her via email or Twitter.