Abstract: With globalization and technological advancements, the rise of networked open innovation model has fostered global innovation networks and accelerated the flow of data worldwide, while also posing security risks at national, societal, and individual levels. Countries face a “trilemma” between data sovereignty, free data flow, and data security protection, resulting in two models: “data liberalization” and “data localization”, which are gradually converging through strategic competition. China should clarify its role in global digital governance and, under the guidance of the holistic national security concept, shift its policy focus from security-first to a balanced approach emphasizing both development and security, which should be reflected in subsequent legislation. To ensure secure and orderly cross-border data flow, efforts should be made to leverage new technologies for data security and build international cooperation network through the Belt and Road Initiative, enhancing China’s role in the global digital economy.