China: China Passes Cybersecurity Law

Last Updated: 15 November 2016
Article by Gabriela Kennedy and Xiaoyan Zhang

On 7 November 2016, the Standing Committee of the National People's Congress of China (NPC) passed the controversial Cybersecurity Law (the "CSL"). The CSL has gone through three readings since the release of the first draft on 6 July 2015 and will take effect in June 2017. As China's first comprehensive privacy and security regulation in the cyberspace, the CSL enhances data protection in many aspects while bringing in compliance challenges for the international community at the same time.


The CSL adopts a tiered approach and imposes different obligations and duties to Critical Information Infrastructures (CIIs) and network operators. "Network operators" are defined to include operators of basic telecommunication networks, internet information service providers, and key information systems. The definition of "CII" has adopted an earlier version that makes specific reference to a few key sectors such as finance and transportation while retaining the broad catch-all phrase from the second draft to cover "infrastructure that, in the event of damage, loss of function, or data leak, might seriously endanger national security, the national welfare, the livelihoods of the people or the public interest." Both the second and third drafts stated that the exact scope of CIIs would be determined separately by the State Council, leaving the government with considerable leeway to bring industries not specifically singled out in the definition into the scope of the legislation at a later stage. Some of the heightened requirements, such as data localisation and cross-border transfer restrictions, apply to CIIs only.

Data Localisation and Cross-Border Transfers

Under perhaps one of the most controversial provision of the CSL, operators of a "CII" are required to store within China "citizens' personal information and important data" collected or generated during business operations in China. If, for legitimate business reasons, the data must be provided to a foreign entity outside China, the operators must complete a "security assessment" jointly formulated by the National Cyberspace Administration and State Council. Notably, the initial draft applied the localisation requirement to "citizens' personal information and other important data" while the later draft revised this to "citizens' personal information and important data." The second draft also narrowed the scope of data subject to localisation to only data collected or generated within China. While the first draft seemed to allow operators to "store abroad such data or provide it" to an entity or individual located abroad provided that it passes a security assessment, the later draft removed the overseas storage option. The terms "security assessment" and "important data" remain undefined.

Upon a narrow interpretation of this localisation requirement, all Chinese citizens' personal data and transaction data collected or generated within China may be required to be stored in China. This in essence would mean a segregation of the global information system into one distinct system for China and one for the rest of the world. This could have a significant impact on multinational companies (MNCs) doing business in China which inevitably need to share data internally and across borders on a daily basis. No exemptions seem to be envisaged by the new law except for the security assessment channel which appears even more stringent than what data privacy regimes such as the EU have always had (be they by way of express consents, internal corporate contractual arrangements sanctioned by regulators, model clauses or other such mechanisms). Even Russia's data localisation rules , which have made headlines, are limited to operators processing personal data concerning Russian citizens that are physically located in Russia or own a website targeting Russia. However, the rules do not prohibit remote access of a database physically located in Russia that processes personal data of Russian citizens. By contrast, under the literal reading of the Chinese law, CIIs must undergo a security assessment with the Chinese authority if cross-border remote access is considered "provision" abroad.

Increased Penalties for Data Breaches and Violations

The CSL provides that Chinese authorities can require network operators to provide necessary assistance and support to accommodate national security and criminal investigation needs without specifying any limit on such power. It also provides penalties for non-compliance with its provisions by business entities or responsible individuals, including warnings, rectification orders, fines, or confiscation of illegal gains, and suspension of business operations or the revocation of the entity's business license. In the case of a network security incident, Chinese authorities may have the power to compel an interview of network operators. The CSL further provides that violations of the CSL should be included in the credit history of violating entities and individuals and can be made public. Additionally, individuals punished for endangering network security could be prohibited for life from taking on jobs related to network security management or other key posts related to network operation in China. Finally, overseas entities or individuals that attack, compromise, interfere with or destroy Chinese CIIs will be subject to legal liability and sanctions including assets-freezing pursuant to a provision added in the third draft.

Enhanced Privacy Protection for Individuals

Although many of the privacy and security obligations imposed upon network operators and CIIs have appeared in other sector-based regulations and guidelines, the CSL makes progress by addressing many specific privacy aspects such as access, data retention, breach notification, mobile privacy, online fraud, and the protection of the privacy of minors. For example, individuals, for the first time, are given the right to request the deletion of their personal data. All network operators are required to preserve network logs for at least six months, and to report upon discovery any security defect, loophole, or other security risks found in their products or services to the relevant authorities and affected individuals. Instant messaging service providers, like any other traditional network service providers, must require users to register using their real identity information. Individuals and organisations are prohibited from establishing "websites or communication groups used to carry out fraud, to pass on criminal methods, to produce or sell contraband or controlled items and to engage in any other illegal criminal activities" or to publish information relating to such activities online. General principles have been added in the third draft for the protection of minors online, serving as a basis for developing further laws and regulations.

While we are expecting additional guidelines to be issued or precedents to develop to clarify some of the key requirements such as the scope of the CIIs, data localisation and cross-border transfers, for now in-house counsel are advised to take a proactive approach by conducting a compliance risk assessment with the aid of qualified privacy professionals, and possibly a comprehensive privacy and security audit of their Chinese operations to determine the best way to stay "within the law". China is now clearly becoming a jurisdiction that will require extra resources to devise the right solutions that do not jeopardise the day to day operations of international business with a presence there.

Originally published on 10 November 2016

Visit us at

Mayer Brown is a global legal services organization comprising legal practices that are separate entities (the Mayer Brown Practices). The Mayer Brown Practices are: Mayer Brown LLP, a limited liability partnership established in the United States; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales; Mayer Brown JSM, a Hong Kong partnership, and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2016. The Mayer Brown Practices. All rights reserved.

This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein. Please also read the JSM legal publications Disclaimer.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions