Data as Assets in Foreign Direct Investment: Is China's National Data Governance Compatible with its International Investment Agreements?

To foreign investors, data, either collected and processed before or after market entry in the host state, can be regarded as a part of the investment and subject to the protection of the applicable international investment agreements (IIAs). China has been developing rigorous and stringent data governance such as data localization requirements and mandatory business-to-government data sharing, and has also concluded the world's second largest IIA regime that provides sweeping investment protection. There is a risk of incompatibility between China's national data policies and its IIA obligations. Foreign investors may challenge China's national laws and practices on data governance, for alleged breaches of investor's protection obligations in Chinese IIAs, or breaches of the data residency provisions in Chinese trade and investment agreements. As a result, potential exists for such claims to be brought against China in investor-state arbitration.