Cross-border data flow to empower Hong Kong digital drivetrain

October 25, 2022 09:43
Photo: Xinhua

Since his appointment as Chief Executive of Hong Kong, Mr. John Lee has emphasized the importance of transforming Hong Kong into a smart city that improves life for Hong Kong citizens. The latest policy address is no exception. It stipulates the urgency for “open[ing]-up” of data—meaning that the HKSAR Government encourages private and public enterprises to utilize data as an innovation driver. Chief among Mr. Lee’s policies is a commitment to explore ways to facilitate data transfer from the Mainland to Hong Kong to promote the coordinated development of smart cities within the Greater Bay Area.

The new administration’s support for digital transformation is a welcome signal to the market, presently plagued by sluggish economic sentiments. Noteworthy is the government’s intention to facilitate cross-border data transfer between the Mainland and Hong Kong. Since the dawn of the digital era, the rapid movement of data across borders has been hailed as the cornerstone of contemporary economic development. Such trope has gained currency in the global arena as data transfer facilitation has also become a regular fixture in recent international collaborative efforts. The unremitting push for data transfer culminated in the recent European Union and United States Privacy Shield 2.0, the data transfer framework such as the APEC Cross-Border Privacy Rules, and other data transfer provisions. Through the data flow of the Greater Bay Area, Hong Kong will not only align with the world’s best practice, but also take a lead on digital development given its unique strategic position.

Since all things digital went into overdrive, to protect national interests and data privacy, Mainland China has been promulgating a spate of measures that regulate cross-border data transfer, including the recent Measures for the Security Assessment in September 2022. Due to the highly-integrated nature of the Greater Bay Area cities, the movement of information, underpinned by morphing technologies, across Hong Kong and Mainland borders will play a big role in determining the economic output within this region. Until the policy on the partial border closure of Mainland China is terminated, we must rely on inventive means to collaborate with our Mainland counterparts. A secured movement of digital information will create an alternate environment that is conducive to collaboration and innovation. The corollary is an exponential increase of the data pool size that lends support to industries ranging from financial services to healthcare to manufacturing. By digitally connecting cities within a region consisting of over 90 million residents, we are primed for huge growth potential and a fast-track to economic recovery.

For the Greater Bay Area cities to develop, businesses on each side of the border must align strategically with the prevailing geopolitical reality. Despite the physical border restrictions, many business activities can now rely on the growing paradigm of digital, rather than physical, movement of information. As the Internet has fueled the growth and success of digital endeavors, favorable policy direction can enable businesses on both sides of the borders to access a geographically diverse customer base and expand the bandwidth of their capabilities, unimpeded by geographic limitations.

Despite the multitude of benefits of making data accessible, there is a tangible peril when unleashing data flow without proper governance and safety measures. Absent technical and regulatory safeguards not only limits the long-term ability of companies to safely process, store, and access information but also compromises data security and personal privacy and dampens users’ trust in evolving technologies. As have been rabidly argued by privacy advocates, a tweak in algorithm or a solo act by a bad actor could drastically impact the lives of millions. Security and privacy safeguards are essential, but these concerns need not be the antithesis of the free flow of data. Risk-based, industry-backed certification regime that safeguards data passage in the face of determined regulatory oversight can crack down on misuse and fortify trusts in tandem. The immediate next step is for industry players to agree upon a universalized mechanism to effect cross-border data transfers.

Technological advances and an increasingly integrated economy have accentuated the uneven regulatory crossroads that we must now address. Since the tidal wave of digital disruptions on a global scale, access to data has become a critical component of innovation. Shared economic growth fueled by an increasingly interconnected digital economy at the Greater Bay Area is the stimulus that our economy badly needs during these uncertain times. Our future economy, as mentioned by our Chief Executive, depends on innovation. And innovation is fueled by data. A legitimate right of use can fuel the growth of thousands of multi-national and local start-ups, funneling data traffic to and from these two regions.

Some might argue that Hong Kong was already late to the party in cross-border data transfer. But there is still reason for optimism. The inescapable truth is that no vibrant economy can operate in insolation. As global economy is verging on a major shake-up, it will take time before the current geopolitical order is put back on an even keel. Timely and judicious policies that connect the digital borders of Hong Kong and the Mainland will trigger positive growth spurts, drive innovation, and create jobs, research, and other new-fangled technological initiatives.

Admittedly, thickening security buffers and cracking down on misuse will not solve all the problems. The digital economy will always be awash with risks. Because data can never be at rest, our digital economy can never be truly risk-free. But we can do more than our previous inertia to reduce the risks of isolation while preserving the dynamism of our economy. We must seize the opportunities presented by this critical juncture and map out a viable path toward prosperity.

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Allen Yeung Tak-bun is former Chief Information Officer, Hong Kong SAR Government. Adam Au is a lawyer based in Hong Kong.