China Monthly TMT Update September 2018

NHC issues the administrative measures on the standards, security and service of national health and medical big data (trial)

The National Health Commission of the People’s Republic of China (“NHC”) issued the Administrative Measures on the Standards, Security and Service of National Health and Medical Big Data (Trial) (“Measures”) on 14 September 2018.

Under the Measures, health and medical big data (“big data”) refers to health and medical related data that is generated from the process of disease control and prevention or health management. Medical institutions and related entities ("responsible organisations") are responsible for the security and application management of big data.

Responsible organisations should (i) conduct technical measures to ensure the security of big data and establish a disaster recovery backup mechanism to ensure complete accurate and timely recovery of big data; (ii) establish a reliable network security environment in accordance with the requirements of the cybersecurity classification protection system; (iii) provide safe channels of information inquiry and reproduction, and strictly implement data access and usage restrictions; and (iv) establish a strict digital real name authentication system, a system for monitoring and pre-warning security of big data, a cybersecurity alert system and an emergency linkage mechanism to enable all relevant parties to be notified or take further action where appropriate. Big data in relation to national secrets should be processed in accordance with the relevant confidential regulations.

Big data should be securely stored on reliable servers within the territory of China. If big data needs to be transferred overseas, responsible organisations must undertake a security evaluation procedure. When selecting a big data service agent, responsible organisations should ensure that the agent complies with the relevant requirements and jointly undertake responsibility with the selected agent. If responsible organisations would like to publish big data, it must not disclose national secrets, trade secrets, individual privacy or infringe any legitimate power and rights.

Please click here to read the full text (Chinese only) of the Measures.

New Law governing e-commerce is published in China

The Standing Committee of the National People’s Congress of the PRC published the PRC E-Commerce Law (“E-commerce Law”) on 31 August 2018, which will come into effect on 1 January 2019.

Under the E-commerce Law, “e-commerce” refers to operating activities of selling goods or providing services through the internet or other information networks. The E-commerce Law mainly applies to three types of “E-commerce Operators”: Platform Operators, who offer virtual platforms to enable various parties to carry out e-commerce transactions; Operators on Platform, who sell goods or provide services through the said platform operated by the Platform Operators; and other e-commerce operators, who sell their own goods or provide their own services through self-established websites or other online channels.

The E-commerce Law highlights a few significant issues. For example, it requires E-commerce Operators to provide alternative options that do not take into account consumers' personal characteristics. Fair competition obligations are also imposed upon all E-commerce Operators. The E-commerce Law also sets out rules regarding the allocation of liability between a Platform Operator and its Operators on Platform and the rules and procedures of IP protection.

The E-commerce Law also reinstates many of the existing legal principles and rules governing the various aspects of e-commerce, such as cybersecurity, privacy and personal data protection, online advertisement, consumer protection, standard form of contract, e-signature, etc.

Please click here to read a Law-Now article regarding this newly enacted law.

MoF issues the announcement on prohibiting the sale of lottery tickets online

The Ministry of Finance (“MoF”) and 11 other authorities jointly issued the Announcement on Prohibiting the Sale of Lottery Tickets Online (“Announcement”) on 21 August 2018.

The Announcement explicitly provides that the MoF has not approved any lottery institutions to sell lottery tickets online. Any illegal or unlawful activities under the cover of lottery tickets, such as privately offered online lottery tickets or online gambling, are also strictly prohibited.

If a commission agent of a lottery institution arbitrarily sells lottery tickets online, the competent authorities may impose punishments on the commission agent, and the lottery institution would be entitled to terminate the commission contract between the commission agent and the lottery institution. The Announcement further provides that the online sale of lottery tickets under the cover of online gaming and any payment or settlement services provided to platforms providing the online sale of lottery tickets are also prohibited.

Please click here to read the full text (Chinese only) of the Announcement.

APIP issues the circular on tightening the administration of online live services

The National Working Group of Attacking Pornography and Illegal Publication (“APIP”) and 5 other authorities jointly issued the Circular on Tightening the Administration of Online Live Services (“Circular”) on 20 August 2018.

The Circular requires that online live service providers (“live providers”), more commonly known as streamers, should (i) fulfil the ICP filing requirements with the relevant telecoms authorities and apply for appropriate administrative licences; (ii) fulfil public security filing requirements with the relevant public security organs within 30 days of their live services being launched; (iii) carry out their business strictly in accordance with the licensed scope; (iv) implement the users’ real-name requirement, strengthen the administration of live hosts, and establish a blacklist of live hosts; (v) improve the system of monitoring and reviewing live content, enhance the measures of dealing with illegal and harmful content, and record published content, log information, and keep such records for a certain period.

Internet access service providers, internet data centre providers and content distribution network providers (“Internet service providers”) must not provide any internet access service to any live providers that: fail to fulfil the ICP filing requirements; fail to obtain relevant business licences; have inconsistent information of ICPs, IP address or domain name; or are included in a blacklist established by relevant authorities. Mobile application stores must not provide any distribution service to the said live providers.

Internet access service providers should establish a mechanism of content review, information filtering and complaints, and establish an all-day 24/7 emergency plan to deal with the illegal and unlawful activities during the online live service.

Please click here to read the full text (Chinese only) of the Circular.

CNNIC publishes the 42nd China statistical report on Internet development

The China Internet Network Information Centre (“CNNIC”) issued the 42nd China Statistical Report on Internet Development ("Report") on 20 August 2018.

The Report states that mobile applications have been constantly developing, especially in respect of short video applications, which have entered a “boom” period, whereby 74.1% of Internet users were using short video applications.

The Report also sets out the current developments regarding emerging technologies. By the end of 2017, the size of the VR industry had increased rapidly in China and had reached 16 billion RMB. However, R&D within the VR industry is mainly undertaken by newly established enterprises, and the industry is facing various difficulties such as lack of talent and unsolved core technical issues. In respect of the AI industry, both R&D and application of AI technology has made great progress during the first half of 2018. Further, by the end of June 2018, the blockchain industry in China was world-leading and possess a large number of IP rights worldwide, a strong culture of financing blockchain projects, various supporting policies and many blockchain applications. The super computers market has also been developing rapidly and recently became industry leaders along with the U.S. However, the Chinese super computers industry is still struggling to deal with its low rates of super computer penetration within the business market and a general lack of talent in the workforce.

Please click here to read the full text (Chinese only) of the Report.