China Monthly TMC Update – November 2016

China formalises rules on internet live broadcasting services

To regulate the activities and content of China’s popular internet live broadcasting (“ILB”) platforms and its users, the Cybersecurity Administration of China (“CAC”) introduced the Regulations on the Internet Live Broadcasting Services (“Regulations”) on 4 November 2016. The Regulations set out the responsibilities and obligations of the parties who operate ILB platforms (“Providers”), and the parties who distribute and/or receive real-time information through such platforms (“Users”), with a particular focus on the former.

The main obligations of Providers include: (i) engaging qualified staff and establishing proper systems to control and prevent the distribution of any illegal or inappropriate content; (ii) having technical capabilities including monitoring expertise necessary for the operation of the platforms; recording the distribution and usage logs of Users for at least 60 days; and (iii) entering into service agreements with Users which include all clauses required by the local CACs.

Users are permitted to use nicknames to distribute or watch content, however, the Regulations require them to provide true identification information to the Providers. If a User violates any legal requirements or the service agreement, the Provider can close the offending account, include it on a “black list” recorded with the local CACs, and refuse to provide any further ILB services.

To read the full text of a Law-Now about this topic, click here.

China publishes new rules to further regulate online literary works

The State Administration of Press, Publication, Radio, Film and Television (“SAPPRFT”) published the Circular on Strengthening the Copyright Administration of Internet Literary Works (“Circular”) on 4 November 2016. The Circular applies to individuals or entities that distribute literary works through information networks, as well as service providers who provide relevant network services for users’ distribution of literary works through information networks (“Network Service Operators”).

Network Service Operators, who provide search engines, browser, BBS, online data storage, app stores, Weibo, WeChat and other online services, shall not distribute or otherwise make available through technical measures (e.g. directed searching, redirecting, integrating) literary works, without the copyright holders’ authorisation and shall not facilitate any parties’ distribution of unauthorised literary works. They are also required to place copyright infringement notices and compliant mechanisms at a notable place on their service interfaces, as well as delete infringing works, disconnect links and other necessary measures within 24 hours after receiving notices or complaints from copyright holders.

In addition, according to the Circular, the National Copyright Administration will establish a ‘black list’ of Network Service Operators who violate copyright, and a ‘white list’ of literary works that require key protection.

To read the full text of the Circular (Chinese only), click here.

China passes Cybersecurity Law to further regulate activities on the internet

The Standing Committee of the National People's Congress (“NPC”) passed the PRC Cybersecurity Law on 7 November 2016, effective from 1 June 2017. The Cybersecurity Law regulates the establishment, operation, maintenance, and use of networks within the territory of China, as well as the supervision and administration of network security.

The Cybersecurity Law declares the state’s sovereignty in cyberspace. It requires that products used in cyberspace shall satisfy certain national or industrial standards. It requires network operators to take a series of measures in accordance with the multi-level protection system to safeguard cybersecurity. It further emphasises the legal principles of personal information protection. In addition, it introduces the concept of “critical information infrastructure” (“CII”), and sets out additional security obligations for CII operators concerning data localisation, national security reviews, and annual security evaluations.

More detailed implementation rules, catalogues, and technical standards are expected to be published nearer the implementation date, to provide practical guidance to domestic and foreign operators.

To read the full text of a Law-Now about this topic, click here.

China enacts new Film Industry Promotion Law

The NPC adopted the Film Industry Promotion Law on 7 November 2016, effective from 1 March 2017. The new law aims to promote the film industry and its socialist core values and to regulate the market.

The new law does not apply to streaming films distributed only through online platforms, which remain exempt from the SAPPRFT’s formal pre-review procedures. The new law removes the requirement that an entity must obtain a ‘License for Producing Movies’, and now allows anyone qualified to produce films to do so. This further opens doors for single project companies and will likely attract more capital to the market.

According to the new law, cooperating with domestic organisations on a project basis (instead of establishing foreign invested enterprises) remains the only way for foreign organisations to produce films in China. The new law provides, however, cooperative films satisfying requirements concerning creation, investment, and profit sharing proportions will be treated as films produced by domestic organisations. The specific requirements are not specified in the new law but are expected to be included in the soon-to-be-published amendments to the Administrative Regulations on Films. In addition, the new law restates the requirement that domestic films should make up a minimum of two thirds of any cinemas offerings and cinemas should “reasonably arrange” screenings.

To read an unofficial translation of the new law, click here.

China extends transitional period for cross-border e-commerce

The Ministry of Commerce (“MOC”) announced on 15 November 2016 that China will extend the transition period for its supervision of cross-border e-commerce retail imports to the end of 2017, to encourage e-commerce retail consumption.

Before the extension, there was a one-year transition period (starting from 11 May 2016) before the implementation of a series of supervision requirements on cross-border e-commerce during which the pilot supervision model will take place in 10 cities including Tianjin, Shanghai, Hangzhou, Guangzhou and Shenzhen. Under the pilot supervision model, retail goods shipped into the bonded zone will be subject to simplified customer clearance procedures. Under both of the two main cross-border e-commerce models (i.e. bonded zone model and direct shipping model), the first-time import licensing, registration or filling requirements for cosmetics, infant formula milk powder, medical devices, and other special food (e.g. health food, special formula food for medical purposes) will not be implemented.

Considering that the pilot supervision model has been playing an important role in facilitating the healthy development of cross-border e-commence, MOC decided to extend it to the end of 2017. During the transition period, relevant enterprises are encouraged to strengthen self-discipline, and effectively control the quality and safety of goods.

China hosted the 3rd World Internet Conference

The 3rd World Internet Conference (“WIC”) was held in Wuzhen, Zhejiang province from 16 to 18 November, 2016. The theme of this WIC is "Innovation-driven Internet Development for the Benefit of All – Building a Community of Common Future in Cyberspace".

President Xi delivered a keynote speech via video at the opening ceremony, and called for increased international cooperation in cyberspace governance. The three-day WIC event had 16 forums covering 20 hot issues, including internet plus smart healthcare, internet plus logistics, mobile internet, anti-cyber-terrorism, new media development, internet culture, big data and “belt and road” information technology. The WIC also released cutting-edge scientific achievements in the internet sector, such as VR glasses, autonomous cars, delivery UAVs. More than 1,000 guests from all over the world attended, including government, internet or technology tycoons and network professionals.