US-China tech war: White House to aggressively shield data interests?

• The US draft order reflects an effort by the administration to respond more aggressively to national security threats from China that acquire troves of US personal data
• The proposal also directs the Department of Health and Human Services to prevent federal funding from supporting the transfer of US health data to foreign adversaries

In June last year, President Biden signed an executive order (EO), revoking and replacing former President Donald Trump’s mandate that sought to ban several foreign-owned apps in the US, especially apps from China like TikTok and WeChat. In the same EO, Biden also instructed for a risk-based analysis to be done on apps owned or controlled by foreign adversaries that may be a threat to US security. 

Under the EO, “foreign adversary” is defined as any foreign government or non-government entity engaged in a long-term pattern or serious instances of conduct significantly adverse to the national security of the US or the security or safety of American persons. Now, there are talks that the Biden administration has drafted another EO to respond more aggressively to national security threats allegedly posed by companies from China that acquire troves of US personal data.

In an exclusive report by Reuters, the proposed EO is currently being reviewed by government agencies in the US. Among details shared include; the EO would give the Department of Justice (DoJ) vast powers to stop foreign adversaries like China from accessing Americans’ personal data. Citing a person familiar with the matter and excerpts seen by Reuters, even the Department of Health and Human Services (HHS) is assigned in the draft to prevent federal funding from supporting the transfer of US health data to foreign adversaries.

The draft order reflects a more aggressive effort by the administration after failed bids by the Trump administration to bar Americans from using popular social media platforms TikTok and Wechat. China and the apps have however denied any improper use of US data. The new EO is apparently in an initial draft that does not include input from government agencies and may change, according to Reuter’s sources.

The draft order, if approved, would grant US Attorney General Merrick Garland the authority to review and potentially bar commercial transactions involving the sale of or access to data if they pose an undue risk to national security, one of the people told Reuters. Additionally, the proposal would also instruct the HHS to get started on writing a rule.

“To ensure that federal assistance, such as grants and awards, is not supporting the transfer of US persons’ health, health-related or biological data…to entities owned by, controlled by, or subject to the jurisdiction or direction of foreign adversaries,” according to an excerpt seen by Reuters.

The new order also tasks the Secretary of Commerce with establishing which classes of transactions are outright prohibited and which are exempt, another excerpt shows. Separately, in September last year, Beijing passed two laws– the Data Security Law (DSL) and Personal Information Protection Law (PIPL) – to restrict cross-border data flows and enforce localisation.

The regulations basically reflect wide-ranging implications for how companies operate in China. While Beijing claims that they are needed to protect personal data and strengthen national security, experts reckon the regulations have made compliance difficult and created policy uncertainties for US firms.