China Monthly TMT Update – June 2018

China

MOT issues the circular on strengthening the joint regulation of entities in the online car-hailing industry during and after the course of their operations

The Ministry of Transport (MOT”) and seven other authorities jointly issued the Circular on Strengthening the Joint Regulation of Entities in the Online Car-Hailing Industry During and After the Course of Their Operations (“Circular”) on 5 June 2018.

The Circular focuses on regulating various unlawful activities, such as the unlawful operation of an online car-hailing business, fake drivers, tax avoidance, information leakage, unfair competition, unlawful payments and settlement. If a person or an entity violates the regulatory requirements and refuses to make corrections, the competent authorities may decide to report the situation to the higher competent authorities and suggest to them that they suspend or remove the app from the app market. The authorities may impose an administrative punishment, such as the termination of the person or entity’s network or business for up to 6 months, or record these administrative punishments under the entities’ name in the National Enterprise Credit Information Publicity System or other national credit information systems.

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

NDRC issues the circular for promoting the healthy development of the sharing economy

The NDRC, together with the Cyberspace Administration of China ("CAC”) and the MIIT, jointly issued the Circular for Promoting the Healthy Development of the Sharing Economy (“Circular”) on 28 May 2018.

The Circular requires that operators of online sharing service platforms should improve their safeguarding mechanisms for customer protection. The operators may combine technical measures such as AI and big data with a manual verification system to strengthen their verification of identities and their content management. They should establish a reasonable pricing and matching system to ensure the fairness of all transactions. In addition, they are required to establish a convenient evaluation and complaints channel for customers to protect the customers' rights.

The Circular provides that platform operators should strengthen their protection of personal information, and refrain from engaging in a monopoly or any unfair competition or IP infringement activities. They must also not conduct illegal or criminal activities such as illegal fund-raising or jeopardizing national security..

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

MIIT publishes the 2018 China blockchain industry whitepaper

The information centre of the Ministry of Industry and Information (“MIIT”) published the 2018 China Blockchain Industry Whitepaper (“Whitepaper”) on 20 May 2018. This is the first official whitepaper concerning the blockchain industry in China.

According to the Whitepaper, by the end of March 2018, there were 456 blockchain technology companies in China. The Whitepaper analyses the development of blockchain technology in various segments, such as the construction of its platform, its hardware manufacturing and infrastructure, security protection, and the industry’s service organisations. In addition, it also explains various applications of blockchain technology in the financial sector and the real economy.

The Whitepaper predicts that blockchain is already at the forefront of global technological development, and that it will be widely applied in the Chinese real economy and will become a major support for the construction of a digital China. The Chinese government will further improve the supervision and standardization of the blockchain industry.

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

CBIRC publishes the guidelines for the data governance of banking financial institutions

The China Banking and Insurance Regulatory Commission (“CBIRC”) published the Guideline for the Data Governance of Banking Financial Institutions on 21 May 2018.

The Guideline provides that banking financial institutions should allocate adequate resources for data governance. It also clarifies the division of duties among an institution's board, supervisors and its senior management team. If necessary, a banking financial institution may establish a position of chief data officer. The Guideline requires that banking financial institutions should establish a data quality control mechanism to ensure the truthfulness, accuracy, continuity and completeness of data and ensure it is kept up-to-date. In addition, the Guideline requires that banking financial institutions should embed data throughout their business operations and risk management and internal controls.

If a banking financial institution does not comply with the relevant laws and regulations concerning data governance, the competent authorities may: request a rectification within a set time period, downgrade the institution’s corporate governance evaluation or its regulatory ratings, and/or impose administrative punishments.

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

MIIT issues the circular on further clearing up and regulating the internet access service market

MIIT issued the Circular on Further Clearing Up and Regulating the Internet Access Service Market (“Circular”) on 10 May 2018.

The Circular targets the illegal establishment of communication networks, illegal operation of telecom services, and illegal operation of cross border data transfer. The Circular require internet access service operators, data centre operators and basic telecom service operators to take necessary technical and management measures to monitor and prevent activities involving illegal operations or the unlawful usage of the internet. Meanwhile, they need to follow the policy of "speeding up the internet and reducing fees” to ensure that the internet can meet the demands of various enterprises and customers.

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