Impact of Data Flow Restrictions on China's Information and Communications Technology Industry Exports

Abstract

Against the backdrop of the digital transformation of global industries and the trend of data localization, this paper examines the impact of data flow restrictions on the bilateral export value of China's information and communication technology services industry using national industry-time panel data. It is found that: (1) data localization has a significant inhibitory effect on the export value of the information and communications technology (ICT) services industry; higher trade openness has a significant promotion effect on the trade of digital services, especially in the telecommunication industry, which mitigates the effect of data flow restrictions. (2) The mediation effect test shows that the data flow restriction policy can have a hindering effect on the export of digital services through the increase of trade costs. The conclusions of this paper provide a basis for balancing data security and trade openness, which is of great significance for the effective formulation of China's digital trade policy and participation in the negotiation of bilateral and multilateral digital trade rules.