Kenneth Jarrett, head of the American Chamber of Commerce in Shanghai, argues that the law's far-reaching restrictions could harm both foreign firms and cross-border trade.
The law's ambiguity is forcing MNCs in many industries to reconsider how they hold data, and Chinese consumers may pay the price.
A foreign firm used to monitor its energy turbines in China from its headquarters, using its real-time global data to optimise operations;
it now keeps the Chinese information on the mainland, efficiency be damned.
A provider of global online education was sending data on Chinese users overseas to allow them to access its courses abroad;
it is now rejigging its IT system to keep such data inside China and may have to curtail its offerings.
The second big worry about the new law is that it may be a Trojan horse designed to promote China's aggressive policy of indigenous innovation.
This push has already led Microsoft, an American software giant,
to enter into a local joint venture and reveal its source code to officials in order to sell a local version of its Windows 10 operating system.
Other foreign technology firms fret that they will be forced to divulge intellectual property to government inspectors,
with no guarantees that such secrets will not be passed on to local rivals.
They are right to worry, say legal experts.
Officials may also decide that certain foreign services do not pass the nebulous test of being secure and controllable.
This uncertainty is already boosting the fortunes of such local vendors as Huawei and Lenovo, makers of servers and other hardware,
as well as Tencent and Alibaba, both of whom are making a big push into cloud services.
Informed sources say these firms have had a hand in crafting the new law.
The local champions should not celebrate quite yet.
As Mr Cheng observes, China's best technology companies are increasingly active abroad, and so they too will need to harness international flows of consumer data in the future.
A law that seems rigged in favour of locals ultimately may end up harming both Chinese firms and consumers.