(Yicai Global) May 8 -- China is strengthening its Internet of Vehicles rules to avoid data transfers abroad, which is expected to boost the domestic cloud demand.

The Ministry of Industry and Information Technology recently released a draft of technical standards for the emerging sector of connected vehicles and roads, asking for public feedback. 

The document clarifies the existing protections and is predicted to affect overseas brands in China. "Foreign automakers will probably need to customize their localized products in response to the Chinese regulators’ requirements," an IoV expert who works for a Chinese internet firm said to Yicai Global. 

Tesla's China arm has not yet commented on the regulation despite Yicai Global's inquiries.

Freeman Shen, founder and chief executive of WM Motor, said to Yicai Global that besides banning overseas transfers of IoV data, the current rules also prohibit the related algorithms from exiting the country. The cybersecurity review for smart vehicles to hit overseas markets is therefore extremely strict, Shen added.

Not allowing data to go overseas was a key principle when forming the new rules but overly strict restrictions may cause some IoV applications to be harder to be implemented, a corporate insider who was involved in developing the standards said to Yicai Global. Several carmakers, vehicle component suppliers, and internet companies dispatched workers to help experts to design the rules.

Moreover, the MIIT document contains criteria for user privacy, driving safety, and other aspects and the system realizes cybersecurity and standardized data management for better compliance, the insider added. The new rules strengthen data regulation, requiring cars that have autopilot systems to store data for assessment in case of accidents. 

Editors: Tang Shihua, Emmi Laine, Xiao Yi