A Memorandum of Understanding Between China and the GBA

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As the Mainland and Hong Kong continue to strengthen their connectivity, there is bound to be an increase in demand for data centres in the Greater Bay Area (GBA). However, this will depend on whether Beijing and the Hong Kong Special Administrative Region (HKSAR) can agree upon clearer and more transparent rules. To this end, a Memorandum of Understanding (MoU) between Beijing and the HKSAR was signed on 29 June to establish the ground rules for data transfer in the GBA. Here are some thoughts from Colliers Valuation & Advisory Services on this important development:

In order for personal data to be collected, the voluntary and express consent of the individual must first be obtained. A person must also have a legal basis for collecting personal data before it can be transferred to another party. However, this requirement is not a strict one and there are many applications of the principle. For example, a photographer may photograph a crowd attending a musical concert without collecting personal data if it is not intended to identify any particular individuals (for example, the purpose of the photography is to demonstrate the large number of people enjoying the event).

Currently, the PDPO only regulates the processing of personal data within Hong Kong and does not confer extra-territorial application. This has been a major concern of the Privacy Commissioner for Personal Data and there are calls for it to be updated to clarify its scope. In addition, the definition of personal data needs to be amended so that it encompasses a broader range of information that can be used to identify an individual. This would include: name; identification number; location data; online identifier; and factors specific to the physical, physiological, genetic, mental, economic, cultural or social identity of an individual.

The MoU will also set out rules on the processing of data that is collected in the GBA, aimed at safeguarding the security and confidentiality of such data. It is hoped that the MoU will facilitate the growth of the data market in the GBA and provide greater opportunities for local companies to enter the global marketplace.

In addition, the development of a new financial data infrastructure called the Common Data Infrastructure (CDI) will help enhance financial intermediation and increase financial inclusion in Hong Kong. This project is part of the HKMA’s Fintech 2025 strategy and will bring about improvements in the quality of data sharing among banks and other sources of commercial data, and enable more efficient financial intermediation. It will also make it easier for financial service providers to access a more complete and up-to-date source of commercial data and to offer innovative products and solutions. This will help strengthen Hong Kong’s position as a regional data hub. This will in turn foster innovation in the banking sector and contribute to the development of a more diversified economy. In addition, it will create more employment opportunities in the financial industry.