In recent decades, the rapidly developing TMT sector has become integrated into nearly every aspect of daily life. This new “ABCD” era of the internet (i.e., artificial intelligence, block chain, cloud and big data) has fully arrived, prompting countries to attempt emerging legal issues with laws and regulations. In 2019, China introduced numerous policies, laws, regulations and rules to promote the development and regulation of the TMT sector. Our summary of China’s law and regulations in the TMT sector in 2019 is as follows.
On January 10, the Cyberspace Administration of China (CAC) issued the Administrative Provisions on Block Chain Information Services (区块链信息 服务管理规定), with effect from February 15, 2019, which state that block chain service providers shall fulfill their responsibilities for safety management of content, have in place technical systems commensurate with their services, formulate and publish management rules and platform agreements, and put in place the real identity verification mechanism. Further, service providers shall not take advantage of block chain services to carry out illegal activities or to produce, reproduce, publish or disseminate information content prohibited under laws and administrative regulations. Finally, a block chain service user will be liable for any violation of the law or user agreement.
On April 15, the National Development and Reform Commission (NDRC) and the Ministry of Science and Technology (MOST) jointly released the Guiding Opinions on Building a Market-Oriented Green Technology Innovation System(关于构建市场导向的绿色技术创新体系的指导意见), which state that a market-oriented green technology innovation system will be in place by 2022.
On May 22，the MOST issued the Letter on Supporting the Building of the National Pilot Zone for the Innovative Development of New Generation Artificial Intelligence in Shanghai (科技部关于支持上海建设国家新一代人 工智能创新发展试验区的函), which reads that the MOST agrees to build the pilot zone for the innovative development of new generation artificial intelligence (AI) in Shanghai. According to the Letter, this pilot zone is expected to play a vital role in building a globally influential hub for science and tech innovation, facilitating the integrated development of cities in the Yangtze River Delta region and driving healthy AI development nationwide.
On May 19, the Ministry of Finance and the State Taxation Administration jointly released the Announcement of the Ministry of Finance and State Taxation Administration (关于集成电路设计和软件产业企业所得税政策的公告), which provides that an integrated circuit design enterprise or a software enterprise that is legally established and satisfies certain conditions, will be exempted from enterprise income tax (EIT) during its first two profitable years and will only need to pay half of the 25% statutory EIT rate from the third to fifth profitable years, and may enjoy tax incentives until the end of such period.
On July 2, the CAC, the NDRC, the Ministry of Industry and Information Technology (MIIT) and the Ministry of Finance jointly issued the Measures for Security Evaluation for Cloud Computing Services(云计算服务安全评估办法), with effect from September 1, 2019, which requires a security evaluation for cloud computing services be carried out upon application of the cloud service providers, who may formally submit applications (along with requisite materials) beginning from September 1, 2019.
The Guiding Opinions of the General Office of the State Council on Promoting the Regulated and Healthy Development of the Platform Economy(国务院办公 厅关于促进平台经济规范健康发展的指导意见), released by the State Council on August 1, encourages new forms of the platform economy by developing “Internet plus service industry" and supporting non-governmental capital investment in internet-based services such as health care, education and training, elderly care and homemaking, culture, tourism and sports.
On October 21, the Supreme People's Court and the Supreme People's Procuratorate jointly issued the Interpretations on Several Issues Concerning the Application of Law in Handling Criminal Cases Involving Illegal Use of Information Networks and Assistance in Criminal Activities Relating to Information Networks (关于办理非法利用信息网络、帮助信息网络犯罪活动 等刑事案件适用法律若干问题的解释) with effect from November 1, 2019, which clarifies 10 aspects of crimes involving information networks, including the criteria of conviction for refusing to fulfill obligations in information network security management, making illegal use of information networks, and offering assistance in criminal activities relating to information networks.
On December 15, the Provisions on Internet Information Content Ecological Governance (网络信息内容生态治理规)定 were released by the CAC with effect from March 1, 2020, specifying that 7 types of content are encouraged by the state, while 11 types are restricted. In addition, Internet information content producers shall not produce certain negative content, including that promoting vulgar contents or focusing on celebrity gossip.
a) Audio/Video Information Services
On January 9, the China Network Audio-Visual Program Service Association issued the Detailed Rules for Reviewing Network Short Video Contents（网 络短视频内容审核标准细则），setting out 100 types of content that are restricted from short-video programs;
On November 18, the CAC, the Ministry of Culture and Tourism and the NRTA jointly issued the Administrative Provisions on Online Audio-visual Information Services (网络音视频信息服务管理规定), with effect from January 1, 2020, which state that online audio-visual information service providers shall legally obtain the relevant qualifications required under laws and administrative regulations, and shall establish and improve their bylaws regarding user registration, review of information releases, information safety management, etc. Organizations and individuals are prohibited from taking advantage of online audio-visual information services and the related information technology to carry out illegal activities that infringe upon the legitimate rights and interests of others. The Provisions further set out requirements for utilization of new applications underpinned by such emerging technology as deep learning and virtual reality, to produce, publish and disseminate audio-visual information, including requirements for safety evaluation, labeling requirements, management of news information, management of information on violations, and for refuting rumors.
To strengthen the management of highly dishonest subjects offering internet information services, on July 22 the CAC issued the Circular on the Administrative Measures for Credit Information on Seriously Dishonest Subjects Offering Internet Information Services (Draft for Comment)( 互 联网信息服务严重失信主体信用信息管理办法（征求意见稿）) for public comment, according to which, where an internet information service provider or user falls under certain circumstances, the competent cyberspace administration shall blacklist that company or individual.
b) Internet Education
In the education industry, the Opinions on Guiding and Regulating the Orderly and Healthy Development of Education Mobile Internet Applications （关于引导规范教育移动互联网应用有序健康发展的意见） was released by the Ministry of Education (MOE) and seven other governmental authorities on August 10. According to the letter, actions will be taken to improve the state of education Apps, fill the regulatory gaps, standardize the management in whole education industry, enhance the quality of Apps, and create a sound development ecology to boost the orderly and healthy development of education mobile Apps.
On September 19, the Guiding Opinions on Promoting the Healthy Development of Online Education (关于促进在线教育健康发展的指导意 见) was released by the MOE and the ten other governmental authorities. The opinions set clear development goals to integrate modern technologies and education, enhance the quality of online education, establish an all-round framework of resource and service standards, and to make significant progress in the building of a learning society, by the year 2022.
To follow up on the above, on November 11, the Ministry of Education released the Measures for Filing Educational Mobile Internet Applications(教育移动互联网应用程序备案管理办法), requiring the providers and institutional users of educational apps to complete the filing with relevant authorities.
To simplify cross-border E-commerce settlement and improve foreign exchange policies for payment institutions, the State Administration of Foreign Exchange (SAFE) issued the Administrative Measures for the Foreign Exchange Business of Payment Institutions (支付机构外汇业务 管理办法) on April 29, which provides that the payment institution shall register with the local branch of the SAFE and sign a contract with a qualified bank, open a foreign exchange reserve account, and handle foreign exchange business through that bank.
On May 29, the SAMR issued the Measures for Supervision and Administration of Online Transactions (Draft for Comment) (网络交易监 督管理办法（征求意见稿）) for public comment. The measures comprise sections on online business operators, consumer rights protection, supervision and administration and legal liability. They expressly state that, except for business operators not required under the law to be registered as market players, all online business operators shall register themselves as market players according to law, adding that natural persons running shops online are allowed to be registered as privately-owned businesses if they meet certain conditions. Moreover, the real identity information of business operators applying to undertake business on a platform shall be verified, checked, recorded and filed, and that a mechanism shall be established to inspect and monitor products and service information displayed on the platform, and irregularities found on the platform shall be dealt with and reported.
On June 12, the State Post Bureau and the Ministry of Commerce jointly issued the Guiding Opinions on Regulating Interconnectivity and Sharing of Data on Express Delivery and E-commerce(关于规范快递与电子商务 数据互联共享的指导意见), which supports e-commerce business operators in providing data on posts and deliveries as agreed upon (including but not limited to the name, address and contact number of the sender and of the addressee, and contents of a parcel), and supports enterprises engaged in express delivery in giving feedback on parcel data as agreed upon (including but not limited to the time when a parcel is accepted, distributed, transported, and delivered, and its tracking information).
On October 30, the State Tobacco Monopoly Administration and the SAMR issued the Announcement on Further Shielding Minors from Harm of E-cigarettes（关于禁止向未成年人出售电子烟的通告）, which prompts e-commerce platforms to promptly shutter their e-cigarette stores and top selling e-cigarette products. The announcement also requires enterprises and individuals that produce and sell e-cigarettes to withdraw their e-cigarette online advertisements.
On October 8, the Interim Provisions on Administration of Online Tourism Business and Services (Draft for Comment) (在线旅游经营服务管理暂行 规定（征求意见稿） was issued by the MOST, laying out the circumstances in which platforms shall be held jointly liable, and intensifying platform requirements regarding qualification review, early warning and insurance. For instance, it is provided that "platform operators shall check and verify the qualification of business operators on their platforms and register their qualifications according to law" and that "a platform operator shall immediately activate the contingency plan, when it learns about any violation of the tourism contract".
d) Online Games
The previous Interim Measures for the Administration of Online Games (网络游戏管理暂行办法) was revoked on July 10.
On October 25, the Circular on Preventing Minors from Developing Online Game Addictions (关于防止未成年人沉迷网络游戏的通知) was issued by the National Press and Publication Administration, requiring the implementation of the real name registration system for online game user accounts, strict control over the time-of-day and duration of online game use by minors, and regulation on the provision of paid services for minors.
e) Cyber Security and Privacy Protection
On March 15, the CAC and the SAMR jointly issued the Notice on App Security Certification and the Implementation Rules for App Security Certification (关于开展 App 安全认证工作的公告), according to which the State encourages App operators to voluntarily acquire App security certification, and encourages search engines and App stores to recommend those Apps that have acquired such certification. The institution responsible for this certification is the China Cybersecurity Review Technology and Certification Center (ISCCC). The testing institution will be determined by the ISCCC according to the certification business requirements and technical capabilities.
On October 26, the Cryptography Law（密码法） was adopted by the National People's Congress (NPC) and will take effect from January 1, 2020. The Cryptography Law is intended to standardize the application and administration of cryptography, promote the development of the cryptography sector, safeguard network and information security, maintain national security and public interests, and protects the lawful rights and interests of citizens, legal persons and other organizations.
Several regulations were issued for public comment:
- On May 21, the Measures for Cybersecurity Review (Draft for Comment) (网络安全审查办法（征求意见稿） was issued by the CAC for public comment, according to which the operators of critical information infrastructures are the subject of network security review. For procurement activities that should be under cybersecurity review, these operators shall, through procurement documents, contracts or other binding documents, require product and service providers to cooperate with the cybersecurity review, and the contract shall not take effect unless the cybersecurity review is passed.
- On May 28, the Administrative Measures for Data Security (Draft for Comment) (数据安全管理办法（征求意见稿）) was issued by the CAC for public comment. According to this draft, where a network operator collects important data or sensitive personal information for the purpose of business operation, it shall complete the record filing with its local network and information administration department. Where the network operator uses user data and algorithms to push news, information and commercial advertisements, etc., it shall mark the word "fixed-push" in an obvious way to provide users with the means to stop receiving targeted push information. When network operators receive requests for personal information inquiry, correction, deletion or account cancellation, they shall inquire, correct, delete or cancel the account (as applicable) within a reasonable time and cost.
- On June 18, the Administrative Provisions on Network Security Vulnerabilities (Draft for Comment)(网络安全漏洞管理规定（征求意 见稿）) drafted by the MIIT together with other related departments, were released for public comment. The provisions clearly state that network product and service providers, and network operators, shall verify the vulnerabilities on their network products, services or systems immediately after they have detected or been informed of such vulnerabilities, and shall take measures within 90 days for the network products concerned and within 10 days for the network services or systems concerned, to remove or prevent the vulnerabilities.
- On November 20, the CAC issued the Administrative Measures for Publication of Information on Network Security Threats (Draft for Comment)(网络安全威胁信息发布管理办法（征求意见稿）) for public comment, which stipulates that the published information on network security threats shall not contain seven types of content, including "the source codes of and methods on how to create computer viruses, Trojan horses, ransomware and other malwares", and expressly states that prior to the publication of information about a network security incident (such as attack, damage or illegal access to a network or information system), the incident shall be reported to the public security organ above the prefecture level of the place where such incident occurs.
Personal information protection became a hot topic and key issue in cybersecurity and we have seen regulations targeting this bring issued, and special programs have been launched, including:
- The Protection Guide for Internet Personal Information Security(互联 网个人信息安全保护指南) released by the Ministry of Public Security on April 10.
- The Measures for Security Assessment for Cross-border Transfer of Personal Information (Draft for Comment)( 个人信息出境安全评估 办法（征求意见稿）) released by the CAC on June 13, seeking for public comments.
- The Information Security Technology- Basic Specification for Collecting Personal Information in Mobile Internet Applications (App) (Draft for comments) （信息安全技术-移动互联网应用（App）收集 个人信息基本规范（征求意见稿）） released by the National Information Security Standardization Technical on August 8, for public comment;
- The Provisions on the Cyber Protection of Personal Information of Children(儿童个人信息网络保护规定), issued by the CAC on August, 22, with effect from October 1;
- The Information Security Technology - Personal Information Security Specifications (Latest Draft for Comment)(信息安全技术-个人信息安 全规范（征求意见稿））released by the National Information Security Standardization Technical on October 22, for public comment;
- The Circular on Launching a Special Rectification Program Against Applications Harming Users' Rights and Interests (工业和信息化部关 于开展 APP 侵害用户权益专项整治工作的通知), released by the MIIT on October 31;
3. Media and Entertainment
On March 29, the Administrative Provisions on Minor-oriented Programs (未成 年人节目管理规定) was issued by the NRTA with effect from April 30. The administrative provisions list 9 types of programs for minors supported and encouraged by the state, as well as 16 types of such programs that are prohibited. It also emphasizes that special channels and network zones for minors shall not broadcast programs that are not suitable for minors. In addition, during the broadcast of underage programs, recognizable rest messages must be prominently displayed at least as frequently as every 30 minutes.
On August 20, the NRTA issued the Opinions on Boosting the High-quality Development of the Radio, Television, Online Audio-visual Industries (关于推 动广播电视和网络视听产业高质量发展的意见), which outline certain tasks of "accelerating the upgrading into the new industrial system", "making greater efforts to optimize the industry layout", "greatly improving the market system", etc.
The General Administration of Sport issued the Administrative Measures for Sports Events and Activities (Draft for Comment) (体育赛事活动管理办法) for public comment, which require that the names of sports events and activities shall comply with regulations, adding that sports events and activities shall not be named with such words as "China", "National", "Asian", "State", "World", "International" or other terms with similar meanings, unless organized by central and state organs (or their affiliated public institutions) or national social organizations. The measures clarify the "internet plus regulation" and credit-based regulation mechanisms for sports regulators at all levels, grading of sports activities by sports associations at all levels, self-management of organizers and sponsors, special tests performed by anti-doping agencies, etc.
On December 5, the Ministry and Culture and Tourism issued the Circular of the Ministry of Culture and Tourism on Relevant Issues Concerning Further Strengthening Administration of Performance Market (Draft for Comments)( 文化和旅游部关于进一步加强演出市场管理的通知（征求意见 稿 ） ) for public comment, which permits the establishment of wholly foreign-owned performance agencies nationwide and provides that certain programs and performances, such as programs relating to electronic music or rap, talk shows and immersive performances, etc., shall be under strict supervision and administration.
On November 19, the MIIT released the Circular on Issuing the Plan for Advancing the 512 Program on “5G Plus Industrial Internet”(工业和信息化部 办公厅关于印发“5G+工业互联网”512 工程推进方案的通知), which sets the development goal of making breakthroughs in a number of key 5G-related technologies indispensable for the industrial internet to significantly enhance the capacity of "5G plus industrial internet" to underpin industries, creating five industry public service platforms and building innovation carriers and public service capacity, by the year 2022.
On June 6, the MIIT issued Revisions to the Classification Catalog of Telecommunications Services (2015 Edition) （ 电 信 业 务分 类 目录 ） to incorporate the fifth generation of digital cellular mobile communications services.
On July 31, the MIIT issued the Interim Administrative Measures for Services of Keeping Phone Numbers Unchanged While Switching Carriers (Draft for Comment) (携号转网服务管理暂行办法（征求意见稿）) for public comment， which requires telecom operators to protect users' right to make free choices and offer them convenient and efficient services, including allowing them to change telecommunications business operators and have their phone numbers preserved.
Beginning January 1, 2020, several new laws will be in force, including the important Administrative Provisions on Online Audio-visual Information Services, as well as the Cryptography Law - both intended to strengthen and update the regulation of those respective sectors and products in response to industry developments and emerging security concerns. In addition, several other long-anticipated laws will likely be enacted in 2020 which will affect how industry participants manage their data and infrastructure, such as the Personal Information Protection Law which is listed in the 2020 legislative plan and would be the first PRC law to systemically address personal information. We also anticipate that detailed implementing rules will be issued in connection with several other laws, such as for the Guiding Opinions on Promoting the Healthy Development of Online Education and The Guiding Opinions on Promoting the Regulated and Healthy Development of the Platform Economy.