Why Hong Kong-mainland data transfer pact is beacon of hope in darkening digital world

As global politics drift towards a more fractured world order, countries and cities are scrambling to sustain stability while erecting barriers

By tapping into Hong Kong’s global market access, the data transfer agreement can pilot China into the future with Hong Kong at the helm

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Adam Au

Adam Au is the general counsel at a multinational corporation.

Published: 8:15am, 24 Jul 2023

While growing mistrust among jurisdictions threaten to choke data flows and stall progress, a new agreement between Hong Kong and mainland China now offers a glimmer of hope for greater connectivity.

The memorandum of understanding that Hong Kong and the mainland signed on June 29 enables data to flow among the Greater Bay Area cities. The impact of the agreement far outstrips its modest name, tapping into open data flows and digital exchange at a time when much of the world is pulling up drawbridges.

Beneath the fanfare lies a seismic shift with widespread implications. Hong Kong operates under the “one country, two systems” principle as a separate jurisdiction from the mainland, which means data transfers from the mainland to Hong Kong were handled as an international exchange. Now the digital gates have swung open.

For some, this pact is just window dressing. Hong Kong is well on its way to recovering from the damage of the Covid-19 pandemic – economic activity has picked up and the city’s unemployment rate is steadily falling. These indicators merit closer scrutiny, though.