Data policy restrictions and cross-border E-commerce: Evidence from China

In the era of digital economics, data has become a crucial factor in driving cross-border e-commerce (CBEC). We examine the impact of data policy restrictions on CBEC, focusing on the Chinese context. Using a theoretical framework that analyzes the costs and benefits of data protection regulations, we delve into the economic effects of these policies. The results show that data policies in importing countries have a substantial negative impact on China's CBEC exports. The heterogeneous analysis shows that this negative impact is stronger for products that are more differentiated, industries that are more highly-digital and high-tech, and countries with higher income. We also estimate the moderating role of data comparative advantage. The results reveal that the trade-inhibiting effect of data restriction increases with the enhancement of importing countries' data comparative advantage. Finally, economic freedom in the importing country can mitigate the negative impact of data policy restrictions.