The second revision of the 1989 law (the first was in 2010) deepens state powers and adds 12 new clauses. It will soon be passed by the National People’s Congress after a second reading.

According to the revised law:

• State employees with access to state secrets will require permission before travelling abroad, and even for a period of time after they leave the job or retire;
• There will be restrictions on the employment of personnel with access to state secrets during a “confidentiality period” after they leave their position;
• All levels of government must set aside funds from their annual budget that will pay for the means of keeping information confidential;
• The National Administration of State Secret Protection will have expanded powers to investigate state secret-related cases, including the ability to check and confiscate files and devices, and to question staff;
• The government and media will educate the public on state secrets;
• Tech products that are used to protect state secrets will be regularly checked;
• The government will offer support for the research and application of information security technology.

The new draft has prompted concern among some foreign businesses and individuals in China, especially after authorities questioned staff from several US-based consulting and due diligence firms, including Bain & Company and Mintz Group, earlier this year.

The law could potentially increase the risks of doing business in China, for example, by increasing the chance of businesses having contradictory legal responsibilities in China and their home region. Some argue that terms in the law such as “state secrets”, “national security”, “national interests” and even “employees” remain poorly defined and could thus be interpreted by those enforcing the law.

The Ministry of State Security has said that criticism of China’s new anti-espionage law and the revised state secrets law is unfounded and that while safeguarding state secrets is a top priority, open international trade and exchanges are also vital.

As an SCMP commentary emphasised, it is hoped that the Chinese government will help foreign businesses to understand the law and make compliance as easy as possible.

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Over the last decade, laws governing the collection, storage, transfer and usage of data have become a cornerstone of the regulatory environment in many markets, including China. Indeed, with China as one of the chief sources of data created worldwide – by 2025, data from China is predicted to account for 27.8% of the total global data created that year – such laws have been among the most high-profile passed there in recent years, attracting attention and commentary from business, legal and administrative communities alike.

Data protection laws are applicable in a wide range of sectors, from e-commerce and the creative industries, to life sciences and healthcare. They are of particular relevance to the education sector though, where those providing services rely upon the accurate and timely collection of various types of data to ensure the quality, suitability, and safety of their offerings. For higher education institutions from the UK, the European Union’s General Data Protection Regulation (GDPR) is likely to be the most familiar. And while an understanding of the GDPR is, by itself, not sufficient to effectively operate within the China market, it remains a useful starting point due to certain similarities between its goals and practices and those of China’s own data protection laws. Succeeding in China generally requires a deeper comprehension of local requirements, however.

The evolution of China’s data protection regime

At the most fundamental level, there are three key laws covering data protection in Mainland China: the Cybersecurity Law (CSL), the Personal Information Protection Law (PIPL), and the Data Security Law (DSL) – all of which were passed in the years since 2017. Together, and alongside various other measures issued by the authorities, they lay out the demands on those handling different types of data. For higher education institutions, meeting these demands involves knowing the differences between Network Operators and Critical Infrastructure Information Operators; the importance of roles such as that of the Personal Information Handler, as well as how these roles can fit into existing institutional infrastructures; and the classification framework that splits data into three categories.

Cybersecurity Law

In China, the first major law regulating data was the Cybersecurity Law (CSL) in 2017, which, at the time, had a strong emphasis on national security. Since then, the focus has shifted towards data privacy and personal information. While this is partly due to the vagueness of the initial law – which included only superficial provisions regarding private data – growing consumer concerns over data theft and insufficient privacy protection have added pressure on Chinese policymakers to create a more coherent and comprehensive data protection regime.

The CSL created strong incentives for the Chinese government to establish clear standards for data collection and transfer. Thus, shortly after the CSL came into force, China published its first Personal Information Security Specification, which defined personal data as including biometric information, personal addresses and bank records. The specification was updated in 2020, adding further safeguards against the unauthorised collection of private data: for example by allowing users to opt-out from specific online functions.

Personal Informational Protection Law

Despite the regulatory activism sparked by the CSL in 2017, the legal foundations for individual data protection remained shaky and scattered across several laws. One particular problem was the lack of a uniform definition of the individual’s right to his or her own data, which was compounded by the fact that the exact nature of what constitutes a violation of privacy rules was stipulated in four different laws: the Criminal Law, the General Principles of Civil Law, the CSL, and the new Civil Code.

The passage of the Personal Information Protection Law (PIPL) in August 2021 marked an important milestone as it provided a single, systematic framework for individual data protection. The many similarities between the GDPR and the PIPL have earned the latter the moniker ‘China’s GDPR’, which, despite differences between the two, has brought China’s data protection regime more in line with international standards.

More importantly, the PIPL has shifted the legal focus of China’s data rules away from security and instead in a more consumer– and commercial-orientated direction. This shift has not only allowed for a more open and pragmatic discussion about the challenges any new data regime faces in a continually evolving technological environment, but also raised the possibility for foreign organisations – such as UK higher education institutions – to participate more actively in future legislative processes; an input which was mostly ignored during the early stages of China’s cyber-related rule-making.

Data Security Law

Nonetheless, national security remains important. The Data Security Law (DSL), which came into effect in June 2021, is a strong reminder of this. The DSL affirms that the Chinese Administration for Cyberspace (CAC), a government agency, remains in charge of all data-related regulations. The law also highlights the importance of the two areas which particularly affect foreign institutions: how to manage sensitive personal information and how to conduct cross-border data transfers of such information.

Both above-mentioned issues are subject to evolving regulatory frameworks which have sprung up following the implementation of the CSL in 2017. Sensitive personal information – including biometrical, health, and financial data – is defined by the Personal Information Security Specification. Data which falls into this category is subject to specific rules governing data storage, requirements in case of breaches and leaks, and data transfers

The CBBC View

Success in China is often best rooted in the knowledge that its data protection laws, while complex and at times fragmented, and while perhaps somewhat unfamiliar in comparison with the legal regimes in place in other markets, continue to be refined, deepened and expanded upon. Crucially, there are solutions to the challenges that China’s data protection laws present, and they are solutions that start with a thorough and up-to-date understanding of the history, development, and application of the laws themselves.

Looking ahead to 2023 and beyond, the China opportunity remains vast. More than ever for UK higher education institutions, it an opportunity that they are well placed to grasp as the country continues to build and modernise its data protection infrastructure, while at the same time continuing to refine and adapt their services alongside these changes.

The information in this article is extracted from “China’s Data Protection Laws and What They Mean for The UK’s Higher Education Sector”, and is the first in a series of reports available exclusively to subscribers of CBBC’s Comprehensive Higher Education Strategy Service (CHESS).

Click here to read more about the benefits of CHESS and how to sign up

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1. Negative Lists for Foreign Investment Access

The National Development and Reform Commission and the Ministry of Commerce released the Special Administrative Measures (Negative List) for Foreign Investment Access (2021 Edition) and the Special Administrative Measures (Negative List) for Foreign Investment in Pilot Free Trade Zones (2021 Edition) on 27 December 2021.

Why it matters: It’s all about market access. These two negative lists detail the industries where foreign investment will either be prohibited or restricted. All foreign investment needs to follow the special administrative measures, such as the cap on the share ratio of foreign investment, set in the corresponding negative lists. The 2021 National Negative List and the 2021 FTZ Negative List were shortened to 31 and 27 items, respectively. Both lists further widened the opening of the automobile manufacturing and the radio and TV device manufacturing sectors.

The FTZ Negative List removed all the entries relating to the manufacturing sector and proposed exploring the possibility of relaxing foreign investment access to the services sector, including market research and social surveys.

2. The 2022 Tariff Adjustment Plan

On 13 December 2021, the Customs Tariff Commission of the State Council released the 2022 Tariff Adjustment Plan to adjust the import and export tariffs of selected goods from 1 January 2022.

Why it matters: It’s all about how much tariff you will need to pay in 2022 if you are engaging in relevant import-export businesses.

From 1 January 2022, China will impose interim import tax rates on 954 commodities, which were previously subject to the default most favoured nation (MFN) tariffs – which are higher. These commodities include anti-cancer drugs and medical products, aquatic products and sports equipment, oil paintings and antique artwork, high-efficiency auto parts, materials for environmental restoration, manufacturing components and raw materials, and mineral resources.

To promote the high-quality opening of markets, China will apply agreed tax rates on selected goods originating in 29 countries and regions for 2022 in accordance with China’s free trade agreements (FTA), including the Regional Comprehensive Economic Partnership (RCEP) and the China-Cambodia FTA, both of which will come into effect on 1 January 2022.

China will raise import and export duties on some commodities to balance domestic demand and supply as well as upgrade its industries, including re-imposing MFN tariffs on some amino acids, lead-acid battery parts, gelatin, and pork.

3. New Guidelines for Trademark Examination

On 16 November 2021, China’s National Intellectual Property Administration released the Guideline for Trademark Examination and Trial, to be implemented from 1 January 2022.

Why it matters: The guideline provides detailed and updated rules about trademark registration in China, with new chapters added regarding the examination of Madrid trademarks and bad faith trademark applications, as well as detailed rules for trademark examination.

The Guideline has two parts. Part I relates to formal examination and routine work, setting out standardised terms and expressions involved in trademark examination and trial. Part II clarifies the examination and trial of “malicious trademark registration,” “signs that shall not be used as trademarks” and the “lack of distinctive features of trademarks”, among other factors.

4. The Evaluation and Repair of Taxpayer Credit

The State Taxation Administration recently released the Announcement on Matters Relating to the Evaluation and Repair of Taxpayer Credit, to be implemented from 1 January 2022.

Why it matters: The taxpayer credit rating is becoming increasingly important for foreign companies operating in China. A good tax credit rating means a company can access more favourable treatment when obtaining tax incentives, applying for loans and obtaining business qualifications, while a poor rating can lead to more stringent scrutiny in a wide range of tax-related matters.

This new announcement details the circumstances under which a taxpayer may apply to restore its taxpayer credit after it corrects dishonest behaviour, performs tax legal liability, is waived from the release of its major tax violating information and records no dishonest tax-pay behaviour for six or 12 months.

5. New Measures for Import/Export Food Safety

On 12 April 2021, the General Administration of Customs (GAC) released the Measures for the Safety Administration of Imported and Exported Food (GAC Decree No.249) and the Provisions on the Administrative Provisions on Registration of Overseas Manufacturers of Imported Food (GAC Decree No.248).

Why it matters: GAC Decree No.249 covers a broad range of requirements on food exports to China, including the registration of overseas facilities, record filing by importers and exporters, quarantine and inspection, and product labelling.

In comparison with the measures currently in effect, among other things, GAC Decree No.249 emphasises that producers and operators are accountable for the safety of the food products they produce and handle and requires food importers to establish a system for the review of their suppliers, including overseas exporters and production facilities.

GAC Decree No.248 changes in registration and application methods and imposes new packing and labelling requirements.

6. Cosmetics Manufacturing and Operations

On 2 August 2021, the State Administration for Market Regulation (SAMR) released the Measures for Supervision of Cosmetics Production and Operation (SAMR Decree No.46) to be implemented from 1 January 2022.

Why it matters: SAMR Decree No.46 provides more detailed rules on the management of cosmetics production licenses and the production and sales of cosmetic products.

Among other regulations, the SAMR Decree No.46 will:

• Implement a notification and commitment system for the renewal of cosmetics production licenses, strengthen regulatory measures, and revoke the licenses of the unqualified producers and operators.
• Require the registrants and entrusted manufacturers of cosmetics to establish a sound production quality management system and implement the quality and safety responsibility system.
• Require trading markets and exhibition organisers to examine, inspect and report unlawful activities, and step up regulatory measures and responsibilities.

7. New regulations for Children’s Cosmetics

To strengthen the supervision and administration of children’s cosmetics and ensure the safe use of children’s cosmetics, on 8 October 2021, the National Medical Products Administration (NMPA) released the Provisions on the Supervision and Administration of Children’s Cosmetics (NMPA Announcement [2021] No.123).

Why it matters: The regulation specifies that children’s cosmetics should be specifically labelled. “Attention” or “Warning” should be used as guiding wording for children’s cosmetics, and warning words, such as “should be used under adult supervision”, should be clearly marked on the packaging.

Furthermore, the regulation stipulates that children’s cosmetics must not be labelled with wording that indicates it is made with food-grade or edible materials or labelled with food pictures.

8. Amended Trade Union Law

On 24 December 2021, the 32nd session of the Standing Committee of the 13th National People’s Congress adopted the Decision on Amending the Trade Union Law of the People’s Republic of China.

Why it matters: The Decision decided to expand the coverage of grassroots trade union organisations. It states that people working in enterprises, public institutions, government organs and social organisations in China, regardless of their nationality, race, gender, occupation, religious belief and educational level, all have the legal right to join and organise trade unions. No organisation or individual may obstruct or restrict their rights.

9. A New National Standard for Service in Senior Care Organisations

On 27 December 2019, the State Administration for Market Regulation (SAMR) and the Standardisation Administration of China (SAC) approved and released the Basic Specification of Service Safety for Senior Care Organisations (GB38600-2019), which came into force on 1 January 2022.

Why it matters: This is the first mandatory national standard in the field of elderly care services in China, clarifying a “bottom line” of service safety in elderly care institutions. It aims to help prevent, investigate and rectify potential safety hazards in elderly care institutions.

The basic requirements state that institutions for the elderly should comply with mandatory provisions for fire protection, sanitation and health, environmental protection, food and medicine, construction, and facilities and equipment standards. At the same time, service safety risk assessments should be carried out before the elderly are admitted to nursing homes, and the scope of service safety risk assessment should include choking, accidental ingestion of food and drugs, pressure ulcers, falls, and accidents in recreational activities, among others.

A version of this article was first published by China Briefing, which is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world. 

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