Following President Xi Jinping’s announcement that China would seek to join the newly-created Digital Economy Partnership Agreement (“DEPA“) at the 2021 G20 Summit in Rome, China’s Ministry of Commerce (“MOFCOM“) formally applied for China to join the agreement on November 1, 2021. The DEPA, which is described as the first trade agreement to target the digital economy, has been entered into by New Zealand, Singapore, and Chile. It contains 16 articles covering provisions on facilitating digital business and trade by improving the ease of business in digital environments, streamlining cross-border data transfers, creating open and equitable data-sharing mechanisms, and ensuring data protection and equal opportunities for all in the digital economy.
One of the potential motives for China’s interest in the DEPA, is the government’s interest in moving toward a comprehensive legal framework on technology for the complete digital transformation of the country by the Chinese government.
As the country is moving away from traditional industries and toward high-tech and related service sectors, the government has stressed the importance of “upgrading” the economy via the digitization of traditional industries, the transition to high-tech capabilities, and the cultivation of digital and emerging industries as a means of sustaining economic growth.
President Xi Jinping has stated: “China must accelerate the pace of legislation in the fields of digital economy, internet finance, artificial intelligence, big data, cloud computing, etc.”. In 2021, a succession of new rules aimed at tackling alleged monopolistic practices by tech companies, data security and other issues had proved the government’s strong approach in reaching such goals.
Similarly, Vietnam is also pushing for developments in policy changes and the business environment. In recent years, the Vietnamese government has been pushing for comprehensive digital transformation for the country. Given the similarities between Vietnam and China, it should come as no surprise that Vietnam is also instigating comprehensive legal reform regarding digital transformation for the country in line with the legislative trend of regulating technology. New Vietnamese legislations regarding this matter have an aura of China’s legal instruments, albeit with varying degrees of adaptation. In particular:
The Law on Cyber Security 2018 (“LOCS“) of Vietnam and the recently issued Decree 53, which specify a number of provisions of the LOCS, have laid requirements for data localization, stating that the data of Vietnamese citizens, collected by domestic companies and certain foreign companies providing specified services, are to be stored in Vietnam. This requirement, among others, appears to have some similarities with the 2016 Cyber Security Law of China, in which Article 37 stipulates that personal information and important business data collected and generated within the Chinese territory shall be stored within China. This said, the requirement under Vietnamese law is less stringent than its Chinese counterpart.
Most recently, China has issued the Internet Information Service Algorithmic Recommendation Management Provisions on regulating algorithms, which are critical to how many technology companies operate, from recommending items on e-commerce apps to users, to recommendations on social media feeds. Vietnam’s Draft E-transaction law also touches on digital platforms. In particular, this draft law proposes requirements on the algorithms used by such platforms, some of which are relatively similar to China’s regulatory requirements.
Given the similarities between the countries, there is an expectation that Vietnam may also soon enter into trade agreements on the digital economy like the DEPA. With this in mind, companies, lawyers, and other relevant stakeholders should be on the alert for such potential changes in the future.