New anti-terrorism legislation became effective on 1 January
2016, underlining China's focus on information and network
security and potentially having a significant impact on technology
companies active in China. Under the new law, telecommunications
and internet service providers may be forced to hand over sensitive
data to the Chinese authorities. Many foreign companies doing
business in China could be affected. We will monitor how the new
law will be implemented.
As previously discussed in
In context, the Chinese government is introducing a series of
new laws aimed at tightening control over matters that may affect
national security. The new anti-terrorism law is part of this
agenda and follows the recent adoption of China's National
Security Law in July 2015 and the publication of the draft
Cybersecurity Law in July 2015.
The anti-terrorism law was first published in draft form in
November 2014. The draft law included several controversial
provisions that received fierce criticism from various governments
and businesses outside China. US President Barak Obama raised his
concerns with Chinese President Xi Jinping. Two key points of
concern in the draft law related to telecommunications and internet
service providers having to share encryption codes with the Chinese
government and having to keep servers and user data in China.
Although these two controversial elements have been dropped, the
new law still requires telecommunications and internet service
providers to supply encryption codes and "technical means of
support" when requested by the Chinese authorities in the
context of prevention or investigation of terrorist activities.
In addition, telecommunications and internet service providers
will be required to carry out preventive measures, implement
supervisory systems and prevent the dissemination of information
with terrorist or extremist content. Any information which is
identified as containing terrorist or extremist content must be
reported to the relevant authorities. However, the definition of
"terrorist information" in the new law is very broad and
there is no definition of "extremist."
The new law applies to "telecommunications and internet
service providers" but the law itself does not define these
terms. It is assumed that any company providing telecommunications
services subject to a Chinese telecommunications licence and any
company that operates a website or provides services via the
internet by using servers in China is subject to the new law.
The implementing measures of the new law have not yet been
issued and it therefore remains to be seen how the Chinese
government will use the seemingly far-reaching discretionary powers
provided under this new law. Given the potentially significant
effects on many companies doing business in China, we recommend
closely monitoring how the new law is implemented. More laws
relating to information and network security are expected to come
into effect in the course of this year. We will keep you informed
of further developments.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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