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I don't think there is any problem with this policy. Chinese user information collected by foreign enterprises must remain in China. a lot of information may involve national security. Doesn't the US often abuse national security excuse? every country needs information security.
I could probably spend a hundred tweet-hours talking about pros and cons of the policy - and I do think there are cons - but I agree that infosec is a fact of life, there is an increasing need for govs to protect domestic data, and China is allowed to do that, too.
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