Cross-border data flow is an important part of high-level financial opening-up, and it is an unavoidable key issue to achieve a financial power. The Central Financial Work Conference proposed that efforts should be made to promote high-level financial opening up and ensure the country's financial and economic security. On the one hand, the financial industry is open in both directions, and cross-border data flows are becoming more and more frequent. The multiplier effect of data elements on the financial industry empowers the transformation and upgrading of the real economy and helps form new quality productivity. On the other hand, global competition is becoming increasingly fierce, and cross-border data governance is facing challenges. Data is the focus of a new round of global competition and great power games, but a globally unified cross-border data governance framework has not yet been formed. There are three main models of internationally influential regulation: the market-oriented U.S. model, the human rights-oriented EU model, and the emerging countries model that promote data localization. In 2023, the United States, Europe, Japan, Europe, and the United Kingdom and the United States will sign a new round of cross-border data flow agreements to accelerate cross-border data interconnection and seize the commanding heights of global data governance. The mainland actively participates in global cross-border data governance, launches the "Global Data Security Initiative", and applies to join international high-standard economic and trade agreements such as CPTPP and DEPA. A legal framework for cross-border data supervision with the Cybersecurity Law, the Personal Information Protection Law and the Data Security Law as the main body has been initially formed, as well as cross-border data mechanisms such as cross-border data security assessment, personal information protection certification and standard contractual clauses, so as to strengthen the global data resource allocation function. In response to the urgent requirements of high-level financial opening-up, the mainland should adhere to the new development concept and gradually build a cross-border data governance system with Chinese characteristics.
System governance, forming a "collaborative force"
Cross-border governance of financial data is a complex system project, which requires the participation and cooperation of the government, enterprises, and all parties in society to form a collaborative governance system of collaborative and co-governance.
The first is to strengthen top-level design and improve the governance framework. Efforts should be made to build the "four beams and eight pillars" of cross-border data governance, and form a unified support system for cross-border data flow. On the one hand, based on the perspective of holistic governance, improve the supervision system for cross-border financial data flow with multi-departmental coordination. On the other hand, the institutional construction of cross-border data flow and the process of high-level financial opening should be planned and developed in a unified manner, so as to promote the institutional opening of cross-border data flow in the financial sector.
The second is to formulate technical standards to promote convenient circulation. On the one hand, define data standards. Connect the data classification method of the financial industry with the data security classification system at the national level, and clarify the definitions and standards of general, important and core data of the financial industry such as banking, securities, and insurance. On the other hand, improve the circulation rules. Innovate the security assessment of financial data export and the standard contract system for personal information export, and adopt a regulatory mechanism that combines "before, during, and after the event" to strengthen risk prevention and security management throughout the life cycle of data export.
Third, we need to strengthen international cooperation and participate in global governance. On the one hand, put forward a Chinese plan. Explore the core concerns and main contradictions of developed countries and regions such as the United States and the European Union, balance the relationship between data sovereignty and data openness, and propose a more compatible Chinese solution. On the other hand, establish a bridging mechanism. Adhering to the open and innovative thinking, we will coordinate the negotiation of international free trade agreements and the construction of domestic free trade zones, set high standards of international data governance rules, and establish an international mutual recognition mechanism for cross-border data circulation in the financial sector.
Scenario-driven, giving full play to the "demand gravity"
Focusing on the typical scenarios of cross-border data of financial institutions, we will form a feasible solution according to the bottom-up approach of "dissecting sparrows" and the top-down requirements of policies and regulations.
The first is to focus on common scenarios and form typical cases. Promote the compilation of general data lists and important data catalogs for the financial industry, taking cross-border payment, cross-border investment and financing, anti-money laundering and other cross-border financial data circulation scenarios as entry points. On the one hand, release demonstration scenarios. Accurately focus on the common demands of different types of financial institutions such as securities, banks, and insurance companies for data export, and solve the pain points of cross-border data circulation in the financial sector. On the other hand, compress the chaotic space. Explore the important data catalog of the financial industry to lay the foundation for the management of the negative list. At the same time, a low-risk data catalog for the financial industry should be formulated, a positive list should be formed, and the chaotic area of cross-border data should be compressed in a "small step" manner.
The second is intelligent data classification and improve the security system. Financial institutions should build a security technology system and management system to realize the full life cycle management and supervision of cross-border data. Apply artificial intelligence technologies and methods such as machine learning to promote the classification of multimodal data such as digital, text, and images in the financial sector, and improve the degree of automation and intelligence in cross-border data classification and classification. Financial institutions are encouraged to adopt advanced security technologies and management measures, and improve the organizational and resource guarantee system for cross-border data security management.
The third is to optimize the service system and strengthen ecological construction. High-quality third-party service providers play an important role in cross-border data compliance consulting and technical solutions, which is conducive to promoting the cross-border flow of data in the financial industry. Cultivate third-party service institutions such as law firms, accounting firms, and technical service providers related to cross-border data circulation, improve the full-chain ecology of cross-border financial data circulation, and provide professional services for financial institutions. Promote industry self-discipline, formulate norms and standards for cross-border data service industries, strengthen the cultivation of cross-border data talents, and improve the service capacity of the cross-border financial data service industry.
Technology empowerment activates "liquidity capacity"
Give full play to the role of new digital technologies in the entire life cycle of cross-border data circulation, and adopt good technical governance in the process of data storage and transmission.
The first is to build trusted facilities and consolidate the digital foundation. Benchmark against the global cross-border financial data hub standards and build a digital infrastructure for the cross-border flow of trusted data. Vigorously build international submarine optical cables, international Internet data exchange points and other special channels for international data transmission, and improve global network connectivity. Explore the establishment of functional and dedicated offshore data centers for international data cooperation, and create a friendly and credible data space with unified standards and internal and external collaboration.
The second is to build a regulatory platform and carry out stress tests. Taking into account data openness and data security, the whole process of supervision is realized "before-during-after". Build a regulatory platform for different types of data exports, such as securities, banking, and insurance, and conduct stress tests on the data classification and hierarchical management mechanism and risk assessment mechanism. Explore the establishment of "data ports" in the field of cross-border data circulation. Adopt advanced digital technology to carry out cross-border data detection and data analysis, and improve the efficiency of cross-border data supervision.
The third is to apply cutting-edge technology and innovate the circulation model. Empower diverse scenarios with emerging digital technologies to ensure accurate control of important and sensitive data. Fully apply cutting-edge digital technologies such as secure multi-party computing, federated learning, and blockchain, and explore new data transmission modes such as "data is available without leaving the country", "data is not cross-border, and algorithm models are cross-border". Develop efficient data desensitization algorithms, improve the complexity and security of data encryption algorithms, and improve the transparency and credibility of cross-border data flows.
(The authors are respectively director and associate professor of Intelligent Finance Research Center, Shanghai Lixin University of Accounting and Finance; Chief Information Officer of Guotai Junan Securities Co., Ltd., Professor-level Senior Engineer)
