In an era where facial recognition technology is increasingly embedded in daily life, from unlocking smartphones to streamlining payments, China has introduced robust regulations to ensure its responsible use. On March 21, 2025, the Cyberspace Administration of China (CAC) and the Ministry of Public Security (MPS) released the Security Management Measures for the Application of Facial Recognition Technology, effective from June 1, 2025. These measures, supplemented by a clarifying notice from the CAC on March 30, 2025, mandate registration for companies processing facial data of over 100,000 individuals and provide a clear framework for compliance. For British businesses operating in or entering the Chinese market, understanding and adhering to these rules is essential to safeguard operations and protect personal data.

The New Regulatory Landscape

China’s facial recognition regulations are part of a broader effort to strengthen data protection under the Personal Information Protection Law (PIPL), enacted in 2021. The Security Management Measures aim to balance innovation with the protection of individual privacy, addressing concerns about the misuse of sensitive biometric data. The rules apply to any organisation, domestic or foreign, processing facial recognition data in China, with a particular focus on those handling large datasets. According to the CAC, companies storing facial data of more than 100,000 individuals must register with their provincial-level cyberspace administration within 30 working days of reaching this threshold.

Recognising the compliance burden, the CAC introduced a grace period for companies that hit this threshold before June 1, 2025, allowing them until July 14, 2025, to complete registration. This transitional measure reflects China’s pragmatic approach to implementation, ensuring businesses have time to adapt without immediate disruption. Additionally, the CAC issued detailed ‘Instructions for Filling in the Facial Recognition Technology Application Filing System (First Edition)’, accessible via the Personal Information Protection Business System or the National Cyberspace Administration Government Affairs Hall on the CAC’s website. These guidelines outline the registration process, required documentation, and compliance expectations, making it easier for companies to navigate the system.

Why Compliance Matters

Facial recognition technology is widely used in China across sectors like retail, finance and security, but its rapid adoption has raised concerns about privacy and data security. China’s facial recognition market is projected to reach £7.2 billion by 2027, driven by applications in smart cities and public safety. However, high-profile cases, such as the 2021 fine imposed on a Hangzhou zoo for collecting facial data without consent, underscore the risks of non-compliance. The zoo was ordered to delete the data and issue a public apology, highlighting China’s growing emphasis on enforcement.

For British businesses, compliance is not just about avoiding penalties; it’s about building trust in a market where data protection is increasingly scrutinised. Robust cybersecurity measures, including compliance with data laws, are critical for protecting investments in China. Failure to register or properly handle facial data could result in fines, operational restrictions, or reputational damage, particularly for companies in sectors like technology, retail, or hospitality that rely on facial recognition for customer engagement.

How to Register: A Step-by-Step Guide

The registration process is designed to be straightforward, with all steps completed online via the Personal Information Protection Business System. Companies must first create an account on the platform before uploading the required documents, which include:

• A Basic Information Form of Personal Information Processor, detailing the company’s operations and data processing activities.
• A Facial Recognition Technology Application Record Form, outlining the scope and purpose of facial data use.
• A Personal Information Protection Impact Assessment (PIPIA), assessing the legality, necessity, and risks of data processing.
• Scanned copies of the Unified Social Credit Code Certificate, legal representative’s ID, agent’s ID, Power of Attorney, and Letter of Commitment, all stamped with the company’s official seal.

The CAC reviews submissions within 15 working days, updating the application status to “Filing Completed,” “Returned for Improvement,” or “Review Failed.” If supplementary materials are required, companies have 10 working days to provide them, or the process is terminated. The CBBC advises seeking professional support, such as from its Information Systems team, to ensure compliance with China’s data laws and to localise global systems effectively.

Conducting a Personal Information Protection Impact Assessment (PIPIA)

A cornerstone of the new regulations is the requirement to conduct a PIPIA, as mandated by the PIPL. This assessment evaluates the legality, legitimacy, and necessity of facial data processing, alongside the potential impact on individual rights and the effectiveness of protective measures. The Filing Instructions provide a tailored template for facial recognition, requiring companies to disclose technical specifications, data collection and storage methods, standard operating procedures, and the ethical basis for data use. For example, companies must clarify whether facial data is used for automated decision-making, such as targeted advertising, and detail the infrastructure and technology providers involved.

The PIPIA process encourages transparency and accountability, aligning with international best practices. The PIPIA requirement has driven companies to adopt more robust data governance frameworks, enhancing trust among consumers and regulators alike.

Easing the Transition

The CAC’s notice reflects a pragmatic approach to regulation, balancing enforcement with flexibility. The grace period for pre-June 2025 data processors and the detailed Filing Instructions demonstrate China’s commitment to supporting businesses during this transition. For British companies, this is an opportunity to align with China’s evolving data protection regime while leveraging tools like the CBBC’s Business Guides, which offer insights into regulatory compliance and market navigation.

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At the conclusion of the Third Plenum in Beijing this week, innovation and the balancing of development and security were set out as some of China’s core strategic priorities. Meanwhile, in Westminster, there has been much speculation over the omission of a dedicated AI bill at the state opening of parliament, despite indications that the draft bill is largely complete. It seems China and the UK are on the same page in this regard as, while the EU AI Act is set to come into force at the start of August, China’s Draft Artificial Intelligence Law has also been pushed further back.

Delivering the keynote speech at the China Internet Rule of Law conference last week, Wang Hongyu, Director of China’s Legislative Affairs Committee (LAC), made this clear in confirming that China’s plans for implementing AI regulation are still under development. Comparing the legislative approaches of China, the US and the EU, he contended that, although there are undoubted risks in the early stages of development of AI, an over-emphasis on security hinders development and can lead to a loss of competitive advantage, adding that “not developing is the greatest risk”.

This phrase may be familiar to followers of Chinese politics, as it forms an integral part of the logic underpinning tech policy and reform. After what has become known domestically as the “century of humiliation”, during which China was subject to foreign intervention, annexation and subjugation by a host of industrialised nations, technology and innovation are seen as a cornerstone of national security in modern China. Symbolic of strength, competence and prosperity, they are a key policy priority throughout China’s five-year plans. Innovation is as much a matter of national pride as it is security.

Against the backdrop of a difficult economy – with slower than expected growth in the second quarter of this year, cooling consumer demand and a faltering property market – Wang’s comments come as part of a broader trend toward relaxation of regulations around innovation in support of “high-quality development”. At the end of March, we saw the Cybersecurity Administration of China (CAC) announce relaxations to cross-border data transfer, creating exemptions where it is necessary for the performance of a contract, e.g. in cross-border e-commerce, international payments and tourism, and also in the transfer of HR data (for more details, see CBBC member Bird & Birds’s take on the changes here.)

At the same time, pilot programmes lifting foreign investment restrictions in telecommunications services kicked off in Beijing, Shanghai, Hainan and Shenzhen earlier this year. Moreover, reports indicate that China’s National Health Commission is set to revise stringent regulations on the use and management of human genetic resources in a bid to boost R&D in China’s biotech sector.

These measures mark a change in the tide for regulation in innovative industries after the crackdowns seen on tech giants in 2021 as China moves to place innovation front and centre in its plans to stimulate growth, striking a balance between safety and innovation. On the ground at CBBC, we are seeing significant opportunities for grant funding for companies in innovative industries looking to China for manufacturing and R&D. While there are still clear red lines for engagement in sensitive sectors, taken together, these changes present a host of new opportunities for companies in the tech and healthcare space to capitalise on, and we expect to see further easing of regulations in these industries.

Elinor Greenhouse is CBBC’s sector lead for tech & innovation, healthcare & life sciences. For more information and to discuss your strategy in China’s knowledge economy contact Elinor at Elinor.Greenhouse@cbbc.org.

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An unforeseen consequence of the ongoing trade war between China and the USA is a potential rise in pollution in China this winter. As China’s policy makers aim to boost China’s economic performance following an economic downturn blamed on the trade war, they have said “bye bye” to pollution control as they dial up the output of factories to ten.

Previous plans to curb steel production and coal use in a bid to reduce air pollution, which worsens in winter months, have been scrapped. China’s northern cities rely heavily on coal-fired power and last year steel producers in four major cities were forced to half their output during winter months and reduce their coking coal by a third. Another 28 cities were also forced to cut steel and aluminium output.

This winter, guidelines have indicated less stringent caps and levels of PM2.5 particulate matter must be cut by only three rather than five percent. The easing may have been prompted by a public outcry, claimed the Financial Times. “Winter curbs on coal, including on heaters used by many residents in smaller cities and villages, left millions freezing as local governments scrambled to provide gas heating.  By imposing emissions targets rather than specific production cuts, China shifted responsibility to local rather than central officials which could also weaken enforcement,” it wrote.

They have said “bye bye” to pollution control as they dial up the output of factories to ten

Elsewhere, a huge deal agreed to provide China with affordable, clean, Liquefied Natural Gas (LNG) looks to be on the rocks. China agreed to invest $43 billion into a LNG project in Alaska during Trump’s visit to China last year. Since 2016, the US has seen a boom in shale gas, leading to an abundance of LNG. This glut of cheap LNG would help wean China off dirty coal and was seen as a win-win but the growing trade war has led to China imposing a 10 percent tariff on $60 billion of goods, including LNG.

China is the second-largest buyer of LNG globally but has dialled back its purchases from the US, turning instead towards Qatar, Australia and Russia. An unfortunate consequence is that China will continue to rely more on coal than it had planned.

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