The CAC just issued its draft Cyber Data Security Administrative Rules for comments. Several interesting points:
1. it confirms my warning 2 weeks ago that even foreign firms like @google, @Meta
& @Twitter are required to comply with the new law even if they are not operating in China, and further expands the list of covered activities under Art. 3 of PIPL by adding
another category: involving important domestic data processing. If all these giant digital firms have not designated a China-compliance officer (even though they have no operation in China), they should do it now.
2. There now 4 categories of data: general data, important data, personal data and core data. Important data and personal data will get special protection, while core data will get strict protection.
3. Cyber security review is now mandated not only for IPOs in foreign countries, but even for Hong Kong!
Major platforms are also required to report to CAC when they set up headquarters or operation centers or R&D centers outside of China.
4. Art. 38 confirms my reading of Art. 38 of the new PIPL two months ago, i.e., international agreements like the RCEP can be used to allow data transfer out of China, which is also confirmed by China's former Minister of Commerce Chen Deming yesterday.
5. The biggest bombshell is Art. 41:
The state establishes a cross-border data security gateway to block the spread of information from outside the People’s Republic of China that is prohibited by laws and administrative regulations from being released or transmitted in China.
Nobody shall provide programs, tools, lines, etc. for penetrating or bypassing cross-border data security gateways, and shall not provide Internet access, server hosting, technical support, promotion, payment and settlement, application downloading for such activities.
"If domestic users access the domestic network, their traffic must not be routed overseas": this clause could potentially outlaw corporate VPNs for all MNCs in China!
Of course, these provisions are not really new. I've documented and discussed them extensively in my paper:
Gao, Henry S. “Data Regulation with Chinese Characteristics.” doi:10.1017/9781108919234.017.
I discussed extensively the requirement to use gov't-sanctioned international gateways for all Internet connections, a provision dating back to 25 years ago.
More recently, VPNs were explicitly outlawed in new rules.
however, AFAIK, this is the very first time the government openly recognizes the existence of the Great Firewall in a law/regulation.
But, for those who rush to conclude that this could violate China's @wto or RCEP obligations, the matter is not that simple as it works one-way,
i.e, by blocking info from entering China only. Apparently, it would not prevent data from being transferred out of China.
In other words, what China is building is a reverse osmosis system, just like the Great Wall.
6. Art 49 requires the platform companies to ensure "the authenticity, accuracy, and legality of the information" that they push to the users. This is the exact opposite of the safe harbor rule in the DMCA and really bad news for big companies like @BytedanceTalk!
7. There are also clauses on a National Cyber ID accreditation system (no more anonymity online); and requires platform companies to comply with government requests for data and info.
8. There's also an interesting definition section that defines what is important and core data, but my favorite is this definition on data cross-border security gateway:
an important security infrastructure that blocks access to overseas reactionary websites and harmful information, prevents cyberattacks from abroad, controls cross-border network data transmission, and prevents detection and combating cross-border cyber crimes.
What are the hot issues from Member's 2562 questions?
Under WTO agreements:
China's implementation of WTO TFA;
consistency of its Cyberseucity law with GATS;
disclosure of info in IPR cases as per TRIPS requirements.
Questions beyond WTO rules:
China to further open up the market, relax restrictions on foreign investment access, reduce the negative list of foreign investment, and promote the innovation of the pilot free trade zone system to be replicated and promoted throughout the country.
China's WTO Ambassador Li Chenggang spoke at a conference on China's 20 years in the WTO last week, where he made some interesting remarks on China's views on various WTO issues.
1. WTO reform in general:
China should consider the issue in a broader context rather than just the Sino-US trade war.
2. DSM, which was a key issue in his discussion with @AmbassadorTai, where he calls for new thinking "not only in the framework of Sino-US game, but from perspective of multilateral trading system, & perspective of a membership structure with increasingly divergent interests."
A lot of gems from the interview:
"Both the EU and the US suffer from overcapacity. Neither of us is at the origin of that. It is somewhat absurd that we should be the ones paying the price for this. So we have to find a solution."
"Since relations with China broke down last March over the issue of human rights sanctions, we have noticed that in the economic field, a division of labour between EU member states and the EU institutions has set in.
The EU as such has been paralysed by the issue of the sanctions, whereas member states were then continuing their economic engagement with Beijing at national level.
Now there is a realisation that that is not a sustainable approach."
Interesting article in QS where Xi explains reasons behind the "common prosperity" drive: 1. Taking the promotion of common prosperity for all people as the focus of seeking happiness for the people, and constantly consolidating the foundation of the party’s long-term governance;
2. High-quality development requires high-quality workers. Only by promoting common prosperity, increasing the income of urban and rural residents, and enhancing human capital, can we increase total factor productivity and consolidate the foundation for high-quality development.
3. The problem of global income inequality is prominent. Some countries are divided between the rich and the poor, ...leading to social tearing, political polarization & populism. China must resolutely prevent polarization, & achieve social harmony & stability.
Hugely important decision from @EU_Commission, which used the role of CCP members in company management and decision to infer state interference on prices and costs, which led to the rejection of Chinese prices as the basis for normal value determination in anti-dumping cases.
In response, Xiamen Xiashun, one of the companies under investigation, argues that CCP membership is nothing more than joining "a religion or political party of its choice and it has no bearing on the decision making in the company".
Personally, I find the reasoning of @EU_Commission a bit weak. Instead, I'd suggest @EU_Commission use this direct quote from Board Chairman of the company, as reported in 2015:
"Party organization & party members have played a vital role in ensuring our impressive performance."