In the digital age, the proliferation of investments made by Chinese state-owned enterprises (SOEs) has raised concerns among host countries about the risks that the investments could provide the Chinese government access to sensitive data involved in the target businesses, posing threats to their national security. Consequently, countries with sophisticated foreign investment screening (FIS) regimes, such as Australia, have imposed entry restrictions on Chinese SOE foreign direct investment (FDI) on the grounds of data security concerns. This article takes Australia as an example to investigate whether this concern has become a ‘panacea’ to justify any restrictions imposed by host states on Chinese SOE FDI in the digital age. Through in-depth examinations of Australia's reformed FIS regime and its application to Chinese SOE investments, this article demonstrates that data security has increasingly become a preferred justification for imposing restrictions on Chinese SOE investments. It argues that the data security justification is legitimate because of Chinese SOEs’ strong political ties, which have been significantly strengthened in China's ongoing SOE reforms, as well as China's prominent policy emphasis on data protection in recent years. However, measures should be taken to mitigate data security becoming a ‘minefield’ impeding the restoration of Australia–China investment relations.